The back-to-back increases in builder activity in both January and February 2023 suggest that there is renewed optimism in the construction industry for the upcoming year. While it is difficult to make a blanket statement about the state of the housing market for the entire year, as the market is subject to various factors such as permits, starts, material prices, construction labor, and deliveries, Coastal Capital Funding has provided an analysis on the new construction market for real estate investors and developers to consider as they plan and prepare for the remainder of 2023.

The 2023 new construction market is expected to see steady growth, with a 6.1% increase in the US construction industry and a compound annual growth rate of 5.2% between 2023 and 2027. However, there are some challenges to keep in mind, such as the projected decrease in single-family starts and permits, and the expected increase in construction material prices.

Builders and developers may want to pivot from spec homes to pre-sold homes to limit risk and ensure a profitable exit, and also factor in higher labor costs for a more accurate budget in 2023. Despite these challenges, demand for new builds is still very solid, with a critical mass of buyers in the market.

Overall, while the new construction market may not be as profitable as in previous years, there is still plenty of money to be made in new home sales and starts across the market. Investors and builders should remain attentive to the various factors that may impact the market, such as interest rates and material prices, however the fundamentals are there for builders to succeed and profit in 2023.

CCF offers a comprehensive approach to lending for real estate investors, with a focus on customized loan programs that are designed to meet their specific needs. The emphasis on smart, efficient lending decisions and fast, flexible financing without red tape shows that CCF is committed to helping its clients move quickly in a competitive market. Our quick approvals and hands-on approach demonstrates our dedication to providing excellent service to our clients. If you are looking for a strong, RELIABLE partner for your real estate investing needs, look no further.

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