Where housing is headed
After a sluggish start to the year, the market for newly built U.S. homes is on track to end 2019 on a solid note.
Sales of new U.S. homes have climbed 9.8% through the first 11 months of this year versus the same period in 2018. The increase largely reflects a steady decline in mortgage rates, which has made it possible for more would-be buyers to afford a home. A limited supply of previously occupied homes has also helped stoke demand for new homes, pushing prices higher.
These trends have helped big homebuilders like TRI Pointe Group woo more buyers this year.
The Irvine, California-based company builds homes in California, Texas and seven other states. Its orders for new homes rose 6% through the first nine months of this year.
CEO Doug Bauer spoke with The Associated Press about the trends that are driving the U.S. housing market now and likely to shape it in the next few years.
Do you expect the U.S. housing market to be stronger in 2020 than this year?
Yes. I continue to feel the outlook for our industry, and in particular TRI Pointe Group, is bright. The millennial cohort is entering their prime homebuying age of their lives, so that’s a demand driver. At the same time, us aging baby boomers, of which I’m one, are always looking to downsize. So, there are two big demographics there that are driving demand, which presents to me a very compelling long-term outlook for the industry.
Many builders have begun focusing on the first-time buyer segment of the market. Which segment are you catering to primarily?
The entry level and move-up buyer are 80% of our business. We just put more emphasis on design, innovation and the customer experience. And that does entail building higher density solutions, potentially smaller products to become more affordable or a better value in the marketplace.
Has the chronic shortage in skilled home construction labor slowed your ability to build homes?
The labor constraint has definitely had an influence on housing starts and permits throughout the U.S. Has it constrained growth a little bit? Yes.
We work with all our trades, and as an industry continue to work throughout all the cities and counties in our building industry associations to provide training and education to get young adults into the housing business, and we see that as a big part of our business going forward.
How do you see the homebuilding industry changing over the next decade?
The smart-home technology is going to continue to push into the homebuilding space and how we sell and market our home is going to change, too. Eventually there are going to be more and more consumers who just pick up their PDA or phone, find a house, go visit it and buy it.