Realtor.com's key insights for homebuilders in 2018

Homebuilders should take advantage of strong buyer demand, increased millennial involvement and wage growth

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Economists say increased residential housing starts are the key to solving the inventory crisis and softening home price growth, but even though single-family construction recently hit a 10-year high, builders are going to need more guidance and resources to bring starts back up to the historic average (1.5 million per year).

Realtor.com partnered with Builders Digital Experience (BDX) to present a special 2018 housing forecast targeted at the builder community during The NAHB International Builders’ Show. The forecast covered the economy, positive demographic trends and how to combat affordability challenges.

“Our collaboration with BDX over the last eight years has enabled builders throughout the country to connect with millions of realtor.com users,” said realtor.com senior vice president of channel sales and operations Tricia Smith. “We are proud to deliver our housing insights to the builder community at a time when many opportunities exist for the new construction industry.”

Here were the four key takeaways realtor.com presented:

  1. Beef up entry-level home construction: Realtor.com noted that robust wage growth will push more renters to become buyers, which means there needs to be more available entry-level home inventory. This price tier has been disproportionately impacted during the inventory shortage, and builders have the ability to seize strong buyer demand.
  2. The millennials are coming: After asking, “Where are the millennials?” for the past few years, the for-sale housing market is finally seeing their presence with the largest cohort of them expected to turn 30 in 2020. As they age into peak family-forming years, realtor.com says, millennials’ priorities will shift from proximity to urban life to more space and quality schools.
  3. Pay attention to the South: The South has consistently fared well when it comes to available inventory, residential housing starts and affordability. Realtor.com says builders can be equally successful in high-priced western markets by adapting to regulatory hurdles.
  4. Builders, don’t let the tax bill make you overzealous: Tax Cuts and Jobs Act is expected to bring robust short-term demand and production, but in the long-term, some say it could lead to fewer sales and negatively impact prices in already-high-priced markets with exorbitant property taxes. Inflation is a concern too as the Fed is expected to aggressively jack up interest rates.

Email Marian McPherson.