The homebuilding industry is coming off its best two years in history with record setting sales and profits. The environment for housing changed last March when the Fed started rapidly raising interest rates to fight inflation. Mortgage interest rates have more than doubled, rising from 3.0% to 7.0% causing homebuyer traffic and sales to be cut in half and cancellations doubling. As we enter 2023, builders will be surviving on their large backlog of sales which should carry them through the first quarter of the year.
However, economists are calling for a recession during the first half of 2023, at the peak of the annual home buying season. A soft and short landing for the housing industry is unlikely. The economic environment is unstable and confusing.
Home builders often miss the cycle turns for a recession and a recovery. Many builders are looking at the slowdown in sales as seasonal and are building spec homes for next year’s selling season. Regardless of when it’s officially declared, housing is already in the early stages of a recession.
In my estimation, builders should be prepared for a sales contraction of between 30% and 50% with selling prices declining between 15% and 20%. Many of our builders are planning for this kind of reduction in sales volume and home sales prices. With the uncertainty, builders are setting up contingency plans, retooling their companies, developing new product lines, and considering organization contractions.
Enough of the bad news. The good news is there are actions you can take to protect your business, and we are here to help guide you through the turbulent times. At the 2023 Executive Summit
, our team of industry experts will demonstrate successful strategies proven to work in down markets. Many of the presenters took appropriate action early to survive and grow during the last housing recession. They will be sharing valuable insight and lessons learned to help you take appropriate action to beat the odds.
This is a must-attend event for builders interested in protecting their businesses and profit margins in a recession and taking full advantage of the recovery. We’re offering an early bird special featuring last year’s prices if you register by December 31, 2022.
Join us in Fort Lauderdale, March 6-8, to learn how you can emerge on the other side of the recession stronger, more profitable, and in a better position for growth.
For more information on the 2023 Executive Summit, visit builderpartnerships.com/executivesummit