Navigating the Current Building Landscape: BAGI’s State of the Industry
INDIANAPOLIS (AUGUST 16, 2022) – The Builders Association of Greater Indianapolis (BAGI) has released its August 2022 State of the Industry letter, discussing the recent home construction and purchase slowdown, sharing insight into current home building issues that are affecting the market and encouraging consumers to be a part of the conversation to address issues and find solutions as they navigate the current economic landscape.
“Our industry has experienced a slowdown in the last 60 days driven by several economic factors,” Steve Lains, CEO of the Builders Association of Greater Indianapolis, said. “Although the pace at which this slow-down occurred is surprising, a housing slowdown itself is not shocking given the unprecedented rate of growth that occurred in the housing market over the last 24 months.”
This trend is also apparent when looking at this month’s building permits report, which shows an annual decline in over half of the reported Central Indiana counties, with a 21 percent decrease in total permits compared to this time last year.
Given these numbers, new construction home sales are predicted to slow by 25% through 2023.
While circumstances such as labor shortage, limited lot availability and material delays continue to be large factors in the building slowdown, there are now several other economic issues that have further shifted the home building landscape such as:
- Inflation – currently beginning to slow, but has risen 9 percent since January of this year which has created consumer goods and service costs to soar.
- Fuel Prices – starting to see an improvement, but still at the highest prices since 2008.
- Mortgage Rates – while slowly increasing from historical lows, they are now approaching 6 percent, which compares to the approximate average rate since the late 1980s.
BAGI members are reporting a slowing in consumer traffic to models which is anticipated to result in slowing sales of approximately 25% through 2023 from the peak level experienced in 2021.
“While we have and continue to face challenges,” Lains said, “we remain confident that this slowdown is not a recession, but a correction – a change in the market that will see price growth slowing, a continued stable supply of new homes, and increased product/labor availabilities. This, in turn, should provide greater opportunity for hopeful Hoosiers the ability to obtain their goal of owning a home.”
Members of BAGI are committed to building and remodeling quality homes in central Indiana, and in turn, to help grow our local economy. The housing market is always changing, yet it is still a great time for investment in remodeling or building a new home with historically low interest rates. Check out the latest industry news and learn about additional resources available to you at BAGI.com.
The Builders Association of Greater Indianapolis is a professional trade association representing residential homebuilders, associates and remodelers. For more information regarding the state of the industry letter or to interview Steve Lains, call 317-236-6330.