{"id":164128,"date":"2024-01-05T14:13:39","date_gmt":"2024-01-05T21:13:39","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=164128"},"modified":"2024-01-23T05:38:47","modified_gmt":"2024-01-23T12:38:47","slug":"homebuilders-will-enter-a-golden-age-in-2024","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024","title":{"rendered":"A Real Estate \u201cGolden Age\u201d Is Coming for Homebuilders\u2014Here\u2019s What That Means"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC1949200214\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Things are shaping up for homebuilders. In fact, one big name in the industry is projecting that 2024 will mark the \u201cgolden age\u201d for homebuilding, thanks to falling&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;rates and frozen existing home supply, among other factors.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">David O\u2019Reilly, CEO of megalith developer Howard Hughes Corp.,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.youtube.com\/watch?v=xQbbQ7UfrWE&amp;ab_channel=CNBCTelevision\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">told CNBC last week<\/span><\/a><span data-preserver-spaces=\"true\">, \u201cWe\u2019re going to have the golden age of new home construction\u201d in 2024, even calling the new home market \u201cextraordinary\u201d in its current form.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">He\u2019s not wrong: Homebuilding activity has surged in recent months. In November,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.census.gov\/construction\/nrc\/pdf\/newresconst.pdf\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">single-family starts jumped 18%<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;over October.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1318\" height=\"450\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/fredgraph-66.png\" alt=\"New single-family housing starts\" class=\"wp-image-164133\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/fredgraph-66.png 1318w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/fredgraph-66-300x102.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/fredgraph-66-1024x350.png 1024w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2024\/01\/fredgraph-66-768x262.png 768w\" sizes=\"auto, (max-width: 1318px) 100vw, 1318px\" \/><figcaption class=\"wp-element-caption\"><em>New Single-Family Housing Unit Starts (2014-2024) &#8211; <a href=\"https:\/\/fred.stlouisfed.org\/\" data-type=\"link\" data-id=\"https:\/\/fred.stlouisfed.org\/\" target=\"_blank\" rel=\"noopener\">St. Louis Federal Reserve<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p><span data-preserver-spaces=\"true\">Starts have now increased steadily for four consecutive months, and experts are predicting further increases in new home construction in the new year.&nbsp;<\/span><\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_6598702f859b3: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_6598702f859b3\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Homebuilding Will Surge in 2024<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The National Association of Home Builders projects a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nahb.org\/news-and-economics\/press-releases\/2023\/12\/single-family-starts-surge-on-falling-interest-rates\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">4% increase in starts<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;across 2024, while Lawrence Yun, chief economist for the National Association of Realtors, is calling for a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.nar.realtor\/newsroom\/nar-chief-economist-lawrence-yun-forecasts-existing-home-sales-will-rise-by-15-percent-next-year\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">13.5% increase<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in new home sales in the new year.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The bump largely boils down to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/do-transitory-mortgage-rates-exist\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage rates<\/span><\/a><span data-preserver-spaces=\"true\">, which have fallen quite a bit from their near-8% peak in October. Now at just 6.61%, average rates on 30-year mortgages are at their most affordable point in over six months.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The problem? It\u2019s still not enough to spur existing homeowners to put their homes on the market. According to Zillow, as of July,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.zillow.com\/research\/rate-lock-selling-32907\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">about 80% of homeowners<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;have an interest rate of 5% or less\u2014so most property owners are not looking to trade in those low rates for today\u2019s much higher ones (unless they absolutely have to). This constrains the supply of existing housing and pushes more buyers toward new construction instead.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s another perk buyers get with new homes, too: builder-offered buydowns. According to NAHB, 29% of homebuilders offered mortgage rate buydowns to buyers in October, and another 21% absorbed financing points for buyers, allowing them to essentially get lower rates completely free of charge.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">O\u2019Reilly told CNBC: \u201cNot only can you pick size, location, but national homebuilders have been able to buy down mortgage rates and offer a lower mortgage rate for buyers.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">According to O\u2019Reilly, builder buydowns range anywhere from 150 to 200 basis points, essentially letting buyers drop their rates from today\u2019s 6.61% to a rate closer to 5% or below. On a $400,000 loan, that would mean a difference of about $500 in monthly payments.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">A Continued Upper Hand<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">These aren\u2019t flash-in-the-pan conditions, either. In fact, builders are likely to keep the upper hand as we move through 2024.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/federal-reserve-to-lower-rates-six-times-says-ing-economics\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Federal Reserve is largely expected to cut rates next year<\/span><\/a><span data-preserver-spaces=\"true\">\u2014meaning mortgage rates will likely follow suit\u2014most experts don\u2019t expect rates to drop by any drastic amount. The Mortgage Bankers Association (MBA) currently predicts an average 30-year rate of 6.1% by year\u2019s end, while Fannie Mae sees a 6.5% average at the close of 2024.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Even at the MBA\u2019s more optimistic number, most existing homeowners would remain locked into their current low mortgage rates, squeezing existing housing supply and pushing buyers toward new construction\u2014and the potentially lower rates they can offer.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As O\u2018Reilly puts it: \u201cThat supply-demand imbalance [in the existing home market] should get worse into 2024, driving demand for new home construction.\u201d<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_15290f47eef3f5e17f72821b3d3a2ef8\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_0ca83348336030f4dd423619c6d985c7\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_d2eb4bc839148321204f3f916fc4f9d5 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/homebuilders-will-enter-a-golden-age-in-2024&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>After years of drought, the tide is finally coming back. 2024 could be a pivotal turning point for the real estate market, and it&#8217;s all because of this. <\/p>\n","protected":false},"author":613679,"featured_media":157123,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8,7119],"tags":[],"class_list":["post-164128","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-trends","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/164128","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=164128"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/164128\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/157123"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=164128"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=164128"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=164128"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}