THE EVOLVING GREEN INDUSTRY MARKETPLACE


Compiled by Suz Trusty


Housing market predictions are mixed for 2023. Yes, sales of existing homes dropped throughout 2022 following the tight market and buyer bidding frenzy of 2021. Yet reports indicate some homeowners are upgrading their lawns and landscapes not only for personal enjoyment, but also in anticipation of putting their home on the market. And many millennials are actively exploring the housing market in preparation for making a purchase. Check out the marketplace lows and highs as reported by key industry groups.


Existing-Home Sales Fell Steadily Throughout 2022 and Into December


Te National Association of REALTORS® (NAR) released


a summary of existing-home sales data showing that housing market activity in December 2022 declined 1.5 percent from November 2022. December’s existing-home sales reached a 4.02 million seasonally adjusted annual rate. December’s sales of existing homes weakened by 34.0 percent from December 2021, marking eleven consecutive months of home sales declines. NAR noted that higher mortgage rates and a lack of inventory have contributed to fewer options for home buyers.


On December 13, 2022, during NAR's fourth annual year-end Real Estate Forecast Summit, Lawrence Yun, NAR chief economist and senior vice president of research, forecast that 4.78 million existing homes will be sold and prices will remain stable in 2023.


Yun predicted home sales will decline by 6.8 percent compared to 2022 (5.13 million) and the median home price will reach $385,800—an increase of just 0.3 percent from this year ($384,500). And, after eclipsing 7 percent in late 2022, he expects the 30-year fixed mortgage rate to settle at 5.7 percent as the Fed slows the pace of rate hikes to control inflation.


NAHB: Sharp Contraction in Construction


An article on December 14, 2022, in REALTOR magazine reported that Danushka Nanayakkara-Skillington, assistant vice president of forecasting and analysis at the National Association of Home Builders, said she expects housing starts to drop by double digits in 2023. Ten, “as the economy improves in 2024, the housing market will gradually come out of this slump that is expected from the next year,” she added.


44 TPI Turf News March/April 2023


Builder confidence has fallen over the last 11 months as mortgage rates rose and buyer traffic slowed dramatically. Fifty-nine percent of builders have reported using incentives, like mortgage rate buydowns and price cuts, to try to win buyers back, Nanayakkara-Skillington said.


Labor shortages combined with lot shortages, higher material costs, and lending issues for builders are all compounding factors preventing more construction. And while lumber prices have eased from record highs, construction costs remain 14 percent higher due to shortages in other supplies, like gypsum and steel. “All of these issues will keep homebuilding down,” Nanayakkara- Skillington said. “We don’t see these issues being resolved in the near future either.”


U.S. Home Builder Spirits Brighten to Kick Off 2023


Yet, in mid-January, Reuters reported, “Confidence among U.S. single-family homebuilders improved for the first time in more than a year in January, potentially signaling the housing slump may have reached its low point even as construction firms' sentiment remains decidedly bearish.”


Te National Association of Home Builders on January 18, 2023, said its NAHB/Wells Fargo Housing Market index rose four points to 35 this month, matching the high end of estimates of 27 economists in a Reuters poll. January's uptick snapped a record-long string of 12 consecutive monthly declines that had dragged the index to the lowest since June 2012, aside from the brief plunge in the spring of 2020 at the onset of the coronavirus pandemic.


“It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Georgia. “Te rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”


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