State of the Industry – Fall 2023
Fall Market Update: Navigating Opportunities and Challenges in the Homebuilding Industry
As long-standing members of the homebuilding industry, we understand the importance of staying informed about the latest trends and data that impact our businesses. This update provides valuable insights into the current market conditions and the opportunities and challenges that lie ahead.
Market Trends and Permit Activity
According to the latest data, permits issued in the 9-county metro area through September indicate a 9% decline compared to 2022. While this number still exhibits a decline for the year, this percentage is up from the spring which sat at a 32% decline. Since June, we have seen a steady rise in permit releases month-to-month accumulating in a 59% increase in September 2023 compared to September 2022. We expect these numbers to continue to rise and ultimately expect to see an overall increase for the year.
Headwinds and the Need for Collaboration
While the market shows promise, it is crucial to recognize the challenges that lie ahead. To address these issues, BAGI has commissioned semi-annual housing studies from the Common Sense Institute (CSI).
The study revealed a high demand for new homes in Indiana, but also highlighted an overall shortage of available housing inventory. In 2022, the Central Indiana area had a housing deficit of up to 61,000 homes, and by 2028, it is projected to require 115,000 new units to meet population growth and close the supply gap.
Despite these challenges, the study concluded that Indiana’s housing market outlook remains positive. BAGI has taken steps to facilitate industry collaboration by creating Building Indiana Roots, a web-based resource that identifies these hurdles and provides solutions.
Additional Industry Insights
Supply chain issues, once a significant concern, have improved, and builders now face the challenge of receiving items too soon and having to store them. However, the main issue now lies in labor needs, particularly in the plumbing, electrical, HVAC, and painting sectors. Labor costs continue to rise with no signs of slowing down.
As we move forward, BAGI will continue to provide market updates that coincide with changing market conditions. Together, we can navigate the opportunities and challenges that lie ahead, ensuring the continued success of the homebuilding industry in Indiana.
Steve Lains, BAGI CEO