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The State of Homebuilding

We all know the challenges the homebuilding industry faces—supply-chain delays, labor shortages, high inflation, and rising interest rates, just to name a few. Now, the question remains: How are these challenges actually impacting homebuilding?

A new report points to some interesting trends. The Assn. of Professional Builders recently shared its 2023 trend forecast for custom builders and remodelers. Here is what it discovered. Builders reported 2022 as a record year for revenue and most importantly, their net profits were up. Many builders also reported signing contracts at record margins during the last quarter of 2022 even as the market softened.

One key statistic of note is that 58% of builders still delivered homes on time and are operating in the black. I think it is important to note that means this did not happen for 42% of builders. As we all know, Peggy Smedley has been on her own journey with the Living Lab and has experienced several delays associated with the process. The journey for homebuilder and homebuyer isn’t always as straightforward as it may seem.

Additionally, the association did cite a slower sales cycle in 2023 and emphasized the importance of builders implementing a structured approach to their selling. The organization noted in particular that builders must understand how their sales will affect their margins. Builders who do not are often forced to drop their prices in order to win jobs, which can then in turn create a long-lasting domino effect that will ultimately impact their bottomline.

This is something we have been preaching here at Constructech and Connected World for decades. Builders must understand their margins and protect them in order to run a successful business. If builders don’t keep up with others in the market, offer competitive price points, and deliver quality service and homes, they will ultimately be left behind.

One of the best ways to do this is with technology. The right estimating system can accurately forecast costs. The right project management software can keep a project on track. The right accounting and job costing system can tie it all together.

Today, these systems are becoming more advanced for homebuilders. With the rise of AI (artificial intelligence) and the IoT (Internet of Things), builders can tap into new data that will keep projects humming along.

Perhaps with this information in hand we can have even more builders delivering homes on time and operating in the black. Perhaps that 58% statistic can rise even higher in the years ahead. The time is now—before the market dips any further. How are you going to leverage technology for the better this year? What steps will you take today?

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