Experts: Builders’ Shift to More Home Construction Might Take 1-2 Years from Elaine Golden-Gealer

Home-building experts predict it might take a year, perhaps two, before the industry fully shifts to constructing a greater volume of homes at lower prices from its current focus of padding profit margins by selling fewer, more expensive homes.

That shift, often described in the industry as pace versus price, is critical to U.S. home construction getting back to its annual average rate of construction starts since 2000 and providing more of a boost to gross domestic product. So far this year, builders are starting homes at a rate of about 60% to 65% of the industry’s annual average of 1 million.

In recent years, builders have focused mostly on building expensive homes to cater to better-heeled buyers. Meanwhile, many first-time and entry-level buyers have remained sidelined by stringent mortgage qualification standards such as requirements for hefty down payments and high credit scores.

The shift to production volume over price will take time, two builders and a housing economist said Thursday at a Houston conference of the National Association of Real Estate Editors.

John Johnson, chief executive of Houston-based David Weekley Homes, a closely held builder that operates in 10 states, predicts that the industry will shift to pace over price “within the next 12 to 18 months.” He added that the supply side of the equation is constrained, too, since builders still face a shortage of labor and lots. Meanwhile, demand will return despite lofty prices for new homes.

Read and see more at The Wall Street Journal here

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Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed

“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”