Key takeaways
- More new home supply is coming. Homebuilders plan to increase their actively selling communities by +11% in 2024, as indicated by our survey and builders’ hunt for new lots and land.
- While climbing mortgage rates in February tempered the start of the spring selling season, short- and long-term indicators confirm that homebuilders are optimistic as they prepare for a strong year.
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Builders expect double-digit community growth nationally.
Builders have bought enough land to increase their actively selling communities +11% by year-end, according to our monthly Burns Home Builder Survey. Builders plan to open more communities as quickly as possible to capitalize on today’s:
- Very low resale inventory
- Strong sales pace and pricing power
Total sales and starts slowed at the end of last year because communities sold out faster than expected.
Planned growth varies widely across the country. Florida and Southeast builders guided to the strongest community count growth rate in 2024 (+17% more communities YOY).
On the hunt for new lots and land
Our quarterly Burns Residential Land Survey also supports projected community count growth. Our consultants, as well as our land survey participants, are seeing bidding wars on finished lots since they require little to no development work to bring new communities to life. These finished lots are in short supply.
We also summarize salient facts from more than 70 publicly traded company earnings calls each quarter. D.R. Horton, the nation’s largest homebuilder, noted in its earnings call on January 23:
While low supply of developed land and soaring land/lot prices will remain a bottleneck for builders, many are ramping up self-development efforts that provide development profits and a steady supply of land/lots. Taylor Morrison (TMHC) recently noted in its earnings call on February 14:
Cautious yet optimistic sales expectations
While builders prepare for the longer term by increasing community counts and buying land and lots, most also anticipate short-term success.
- In our March Burns Home Builder Survey (measuring February conditions), 41% of builders expect Good sales over the next six months. The percentage of builders expecting Good sales fell from the previous month, reflecting a slower-than-expected February after a stronger-than-expected January.
- As we move through the spring selling season, our clients will benefit from mid-month builder channel checks, where we will watch closely for changes in builder sentiment.
Short- and long-term indicators confirm that homebuilders are optimistic as they prepare for a strong year. While we remain particularly concerned about housing affordability, we do not see any signs that builders will slow their growth plans anytime soon.
