A stronger economy and improvements in housing demand will support industry growth.
New York, NY (PRWEB) August 31, 2014
Homeownership is the cornerstone of the American dream, with housing typically accounting for the largest percentage of individual wealth in the United States. “Housing investment is also crucial for the US economy because it influences the pace of general economic growth and provides an important fiscal and monetary policy connection between governments and households,” according to IBISWorld Industry Analyst Jeremy Edwards. Consequently, revenue for the Home Builders industry traditionally fluctuates with economic cycles.
In the five years to 2014, the industry has begun to emerge from the deep recessionary lows caused by the collapse of the property market. Industry revenue fell a dramatic 29.0% in 2009 and continued falling to a low of $59.8 billion in 2011. “Falling consumer incomes, rising unemployment and restricted access to credit caused consumers and property developers to stop building homes, especially as the market was oversaturated due to excessive construction throughout the 2000s,” says Edwards. Even as the recession ended, consumers remained wary and new homes were not built as existing vacant buildings were sold. However, the industry began to recover in 2012 with a 28.2% increase in housing starts. Overall, the industry revenue is estimated to grow at an average annual rate of 7.9% over the five years to 2014, though this increase largely represents the recovery from recessionary lows. In 2014, industry revenue is expected to grow 14.1% to $90.4 billion, remaining below pre-recessionary levels.
Over the next five years, home builders are expected to see more consistent growth as the property market recovers. The next two years are expected to be especially strong for the industry as low interest rates, rising consumer confidence and higher corporate profit result in strong investment from consumers and property developers alike. However, industry revenue growth is anticipated to moderate as interest rates and higher mortgage rates stabilize lending to home builders.
For more information, visit IBISWorld’s Home Builders in the US industry report page.
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IBISWorld industry Report Key Topics
Industry operators primarily construct single-family homes, where units are separated by ground-to-roof walls and have no units above or below. The industry also includes remodeling of houses and other residential buildings. Industry operators are general contractors, design-build companies and single-family construction management firms acting as general contractors and builders. The industry does not include speculative builders or contractors that build on their own account for sale.
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