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Huge Gains in New Home Sales and Pricing 10 Years after the Downturn

John Burns Real Estate Consulting, Great Recession, Phoenix, Florida, Indianapolis, Columbus, US Census Bureau American Community Survey, US Census Bureau Population Estimates

Ten years after John Burns Real Estate Consulting began surveying home builders every month, new home sales and pricing feedback demonstrate a solid and sustained recovery.

Our June 2018 survey capturing 358 metro ratings across 83 metros confirms that demand for new homes remains strong, while low inventory and rising costs promote rising home prices. The landscape looked very different when we initiated our Housing from the Frontlines survey in June 2008.

  • In June 2008, 65% of participating builders rated current sales as Poor, and 58% indicated they reduced prices month over month. Builders were drowning in finished homes, averaging over 5 per community, which contributed to falling prices.
  • In June 2018, 58% of builders report Good current sales, with 59% raising prices (net of incentives) month over month. Very low inventory averaging 1.5 homes per community and rising costs drive strong price increases year over year.

Changing demographics have continued to impact housing demand over the last 10 years. Our builder survey captures strong demand for new homes targeting 55+ buyers, as well as re-energized demand from first-time buyers. Chris Porter, our Chief Demographer and coauthor of our book Big Shifts Ahead, shares some demographic changes from 2008 to 2018 below:

Significant pent-up demand among young adults

  • We estimate 27% of young adults aged 25–34 are living with relatives in 2018*, up from 20% in 2008. Although the Great Recession delayed employment and earning power for many young adults, our survey participants report strong demand for first-time buyers today.
  • First-time buyers have delayed home ownership. We estimate that 50% of new households own a home at age 37 in 2018*. In 2008, 50% of new households achieved homeownership by age 32, five years earlier than today.

Huge opportunity to sell homes targeting boomers

  • 45 million baby boomers (61%) have reached their 60th birthday as of 2018 by our estimates*, up from 9 million (11% of the generation) in 2008.
  • Not just the Sunbelt. Our builder contacts see strong active adult demand across many obvious (Phoenix, Florida) and not-so-obvious (Indianapolis, Columbus) metros and price points.

Our monthly survey has been a leading indicator for new home sales, pricing, inventory, and cost pressure for 10 years now. Matched responses, both year over year and month over month, support our accurate conclusions. The insights shared by participating home builders:

  • Inform our understanding of this long and muted housing recovery
  • Highlight significant differences by region and home buyer types
  • Influence our new home volume and price forecasts
  • Quantify rising materials and labor costs
  • Provide great insight into the labor shortages, jurisdictional restrictions, and other dynamics that shape new construction

Research clients receive our timely and accurate builder survey analysis just days after each month ends.

Production home builders interested in participating in our confidential survey in exchange for the full report may contact Jody Kahn at jkahn@realestateconsulting.com or Devyn Bachman at dbachman@realestateconsulting.com.

*John Burns Real Estate Consulting, LLC, calculations of US Census Bureau Population Estimates and US Census Bureau American Community Survey (2018 estimated).