I've personally seen a lot of the market conditions that Graham mentions in this video, and agree with a lot of his predictions here. Not 100%, but a lot. Worth the watch.

If there is any type of price crash in 2023, how does that impact pricing for new construction homes? Do those typically follow construction material prices more closely, or will they discount new construction based on the market?

XXXVII said:

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If there is any type of price crash in 2023, how does that impact pricing for new construction homes? Do those typically follow construction material prices more closely, or will they discount new construction based on the market?

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Not in the industry, but my opinion, it has to follow the market. You won't have enough people willing or able (meaning the house won't appraise for the price and mortgage won't be approved) to pay a 10-20% premium for new builds. Some, yes, but not enough to sustain that market. But I could see a higher premium on truly custom high end homes in certain markets.

My other opinion, most construction costs are down. Lumber is basically down to where it was in 2018-2020. Cement and concrete are up and labor is up. Profit margins for builders are higher than they were 2-3 years ago, so they have room to absorb some drop in the market.

Then looking at if the market does drop, how will that effect builders prices.....a big cost, land, will drop if the market drops. Also, if the market drops, building will slow, based on my opinions above. As building slows and demand decreases, materials pricing will also start to fall.

I think it depends. Large tracts? Probably not. But there's always people who need/want to sell. But where I'm looking in houston lots are pretty much all spoken for. All the new builds going up are old tear down houses. Most of these seem to be when someone passes and their estate just sells. They aren't going to hold for the market, to come back up 5-10%, in most cases.

infill lot sales won't move the new construction market.

It's the large tracts out in the boonies that groups like Johnson Development buy up that move the needle.

Honestly though, I can't imagine they're paying the same price for dirt that they were a year or two ago.