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Homebuilding Slowdown

Homebuilding to see slowdown, not recession


Despite dire predictions of a recession for the homebuilding industry in 2006, construction executives say the industry will only experience a slight decline.


A McGraw-Hill Construction and Deloitte & Touche USA LLP's real estate industry group issued a report in mid-January suggesting that a "moderate slowdown in certain regions of the U.S. housing market" appears more probable than a "deep-seated recession".


The report, "Staying Competitive in Today's Homebuilding Industry" surveyed U.S. homebuilder executives, and highlights the dynamics and challenges construction executives face.


The report also found that land is the most important commodity to the success of a homebuilder, and children of Baby Boomers and immigrants will lead overall growth in households over the next decade.


"The goal of any homebuilder, be they large or small, is to create economic value." said Paul Prescott, a principal with Deloitte Tax LLP and leader of Deloitte & Touche USA's homebuilding industry group.


"Commanding prices that are greater than the full costs of producing homes is only part of the value equation- the larger part, especially for public builders, is achieving superiority in long-term return on investment.” Prescott advises construction executives.


The study underscores fundamental shifts that will lead to industry change:


Arrow Bullet Land is increasingly scarce in desirable markets
Arrow Bullet National and regional procurement is increasing, which means large homebuilders are reaping the benefits and gaining capital advantage
Arrow Bullet

Consolidation will continue

Arrow Bullet Growing materials trends are high-end kitchen materials and tile and wood flooring

The report is available online at




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