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Pro Builder 2020 Housing Forecast

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Pro Builder 2020 Housing Forecast

Optimism reigns as the home building industry enters a new decade


By Rich Binsacca, Editor-in-Chief November 27, 2019
Pro Builder research pie chart showing housing forecast data
Icon: tribalium81 / stock.adobe.com
This article first appeared in the December 2019 issue of Pro Builder.

If there is any pessimism about how housing will fare in 2020, it wasn’t apparent in the opinions of our readers. 

Representing a broad spectrum of the industry nationwide—led by production builders (42.8%, nearly two-thirds of which are in the move-up/move-down segment), custom builders (27%), and those diversified into remodeling (12.6%)—the results of our annual forecast survey indicate general optimism despite the specter of a mild economic or “growth” recession next year and its effect on housing production and sales. 

Case in point: Just 11.6% say they’ll build fewer homes next year than in 2019, while more than half plan to build more; meanwhile, 66% anticipate greater sales revenue—a third of those expecting more than a 10% bump from 2019. About half plan to buy land in 2020, relying on a diverse array of financing options. And while more than 40% are “somewhat optimistic” about their local market conditions in 2020, another 22% are very optimistic, echoing their rosy revenue forecast. Half look forward to a “very good” or even “excellent” year ahead.

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That optimism stems from a continued reliance on production (namely move-up) homes, as well as continuing strength in the custom home realm. For perspective, we also compared 2020’s top growth segments to the survey we did leading into 2012, the start of the recovery from the last recession.

Builders also see many opportunities to enable growth, from smaller, higher-performing homes to “recession proof” upscale clients and diversification into home remodeling and light commercial work, among others. 

On the downside, 78% of builders anticipate prices of materials and overall bids will increase next year and they continue to face challenges for skilled labor and managing regulations and entitlement fees—barriers in stark contrast to those they were dealing with going into 2012.

 

Methodology and Respondent Information: The 2020 Readers’ Forecast Survey was distributed to Professional Builder’s print and digital readers between Sept. 8 and Oct. 5, 2019, as well as to builder members and clients of The Shinn Group–Builder Partnerships, Do You Convert, TrueNorth Development, SMA Consulting, IBACOS PERFORM, and the Housing Innovation Alliance. Recipients were offered the chance to win one of four $50 Visa gift cards for completing the online survey. Gift cards were awarded in mid-October 2019. As many as 215 responses were recorded and 202 surveys were completed. For additional findings, go to probuilder.com/december-2019.

 

How many more or fewer homes are builders forecasting to sell in 2020sales revenue forecast for 2020 compared with 2019

 

Top five types of home building activity in 2020

[Icons for charts above: nicknik93759375 / stock.adobe.com; vektor67 / stock.adobe.com]

 

five biggest challenges for home builders in 2020
As the industry crept out of the depths of the Great Recession in 2011, reasons for optimism for the coming year were in short supply and quite diverse. Back then, government regulations (4.5%), local permit fees and taxes (2.8%), and finding qualified employees (2.7%) were among the least of a builder’s worries, but today they rank near the top.

 

five biggest business growth opportunities in 2020

 

five biggest business growth opportunities in 2012

 

home builder revenue in 2019 compared with 2018

 

 

revenue expectations for 2020 revenue relative to 2019

[Icons for revenue charts, above: kashurin / stock.adobe.com]

 

How would you rate 2019 as a business year for your company

 

 

what do you expect for your business in 2020

[Icons for How Do You Rate charts, above: tribalium81 / stock.adobe.com]

 

Access a PDF of this article in Professional Builder's December 2019 digital edition

 

Written By
Editor-in-Chief

Rich Binsacca is Professional Builder’s editor-in-chief. He has served as an editor and frequent contributor to several housing and building construction-related print and online publications, and has reported and written about all aspects of the industry since 1987.

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