Housing market highlights
From Savannah, an industry analyst shares a trove of data.
Chris Beard
SAVANNAH, GEORGIA—In a session titled "U.S. Housing Market Outlook: State of the Industry Report" at HBSDealer's ProDealer 2024 Summit, Chris Beard, building products director for research firm John Burns Research and Consulting, shared a presentation packed with insightful data.
Beard covered a range of topics pertaining to the housing market and artfully weaved together a data-driven picture of the building materials market moving forward.
Listed below are some key takeaways from Beard's session.
- Rate cuts will boost housing in 2025, though it's too late to help boost figures in any meaningful way in 2024.
- A surge in net immigration (+3.6 million) is fueling increased labor market participation.
- Immigration created 700,000 more households (roughly 600,000 renter households and 100,000 owner households) over the past three years.
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- The immigration influx is filling up apartment demand.
- There's currently a housing shortfall of approximately 1,500,000 throughout the U.S.
- Most major U.S. markets are undersupplied with housing.
- Homeowners have near record levels of equity right now (an average of $402,000 per home as of Q2 2024).
- A major housing headwind is consumer sentiment, which is still quite low, though it’s rising.
- New homes represent 26 percent of the total for-sale single family inventory.
- Publicly traded companies comprise 55 percent of new home sales (DR Horton and Lennar capture a quarter of the market.)
- Mortgage rate buydowns (26 percent) and closing costs (20 percent) remain the most common incentives homebuilders are offering, per John Burns' latest research.
- Single-family homes are now smaller than at anytime since 2011.
- Yet they're more expensive, as building materials are up 3 percent year-over-year.
- On that note: Affordability is the dark cloud looming over the entire industry.
- To help reduce costs, builders are pursuing simpler floor plans.
- Consumer uncertainty (23 percent of respondents) is the biggest obstacle to big-ticket remodels right now, followed by skilled labor shortage (22 percent).
- Many homes are entering “prime remodeling years.” Twenty-four million homes will be 20 to 39 years old in 2027.
- People born before 1970 now control $107 trillion in wealth. A huge wealth transfer is imminent.
- Wallboard, roofing and insulation prices are increasing.
- Despite the challenges of 2024, 2025 is setting up nicely for new construction and R&R. Beard foresees a boost in demand from "all customer segments."
