To Increase Profits, Builders Should Keep a Close Eye on Market Conditions
A recent report suggests gross profit is key to getting builder profitability back up
June 20, 2024
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To increase profits, builders will have to watch market conditions closely.
Despite challenges with rising costs, builders in 2023 managed to maintain profitability at 14.6% year-over-year. According to recent research from Shinn Builder Partnerships, an organization that connects builders across the U.S., this metric was achieved by builders keeping a vigilant eye on the market. With market conditions expected to remain strained over the next several quarters, the organization suggests builders should continue to carefully manage their materials selection, negotiation processes, waste control, and speed of construction.
Moving forward in 2024, potential increases in interest rates continue to present a real danger to sales volume and profitability. The market will not tolerate large price increases; thus, design, efficiency, and cost containment will continue to be the areas to focus on to maintain and increase profits. It is essential to recognize that superior gross profit provides the necessary flexibility to respond to changing market conditions.
