Builders Share 2023 Outlook, Slight Majority Say Contracts Will Decrease

December 15, 2022


Home builders shared some 2023 expectations in the latest HomeSphere/BTIG State of the Industry Report and one somewhat surprising statistic was that only 51% said they believed new contracts would decrease from 2022 to 2023.  

Meanwhile, 33% of builders said they think new contracts will be up next year, while 16% said they expect business to be flat. Only 3% said contracts could be up more than 30%, while 12% expect contracts to be down more than 30%. 

Image of bar graph showing builder responses to how they'll perform in 2023.
Source: HomeSphere, BTIG Research

Demand trends continued to remain soft, with 8% of builders reporting year-over-year increases in sales orders in November while 71% reported a decline. That compares to 57% reporting year-over-year increases in November 2021 and 16% reporting year-over-year decreases for the same time period.

Image of graph showing change in sales orders year-over-year.
Source: HomeSphere, BTIG Research

Based on the data, it’s likely that the NAHB/Wells Fargo Housing Market Index will come in below the current Factset consensus expectation of 35.  

Highlights from the latest State of the Industry Report

Traffic trends also remain soft. Like sales trends, only 8% of builders reported an increase in year-over-year traffic at communities while 69% saw a decline. This compares to 11% and 70%, respectively, for October. 

Sales and traffic performance relative to internal expectations were also very weak. 10% of respondents saw sales as better than expected while 50% saw sales as worse than expected. For October, 7% of respondents reported sales as better than expected and 55% reported them as worse than expected. Meanwhile, 7% of builders saw traffic as better than expected, while 42% of builders saw traffic as worse than expected (12% and 45%, respectively, for October). 

Builders continue to cut base prices and use incentives. The number of builders raising prices picked up slightly with 15% of builders reporting raising either "most/all" or "some" base prices versus 12% for October. However, 39% of builders lowered "most/ all" or "some" base prices versus 47% for October. Incentive use decreased slightly but remained elevated as 40% of respondents reported increasing "most/all" or "some" incentives versus 55% for October. 7% of builders reported lowering "some" or "most/all" incentives compared to 5% for October. 

HomeSphere/BTIG State of the Industry Report

HomeSphere partners with the global investment bank BTIG to create a monthly report to provide our builders and manufacturers with exclusive and timely insights about the market.

To compile the report, we survey HomeSphere’s 2,700+ regional and local home builders about sales, traffic, pricing, labor costs and other key industry metrics.

How to get the monthly report

If you are a builder and would like to participate and receive the monthly report for free, request an invitation below:

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