With 2024 just one month old, it’s still essential to put together a plan for the year to map out the best path to maintain last year’s business level and find opportunities for the rest of the new year and beyond. To do that, you must know what’s happening in your immediate marketplace and understand the industry trends that can impact your company and your plans.
From national regulations to residential market statistics, new technological opportunities and customer demands, the next 11 months will offer challenges, opportunities, and roadblocks. Some of these come from increased demand in high-efficiency and Indoor Air Quality (IAQ) to housing issues, high prices, and labor shortages.
First, let’s take a look at the residential housing market across the U.S.
U.S. Housing Market Trends
According to the Trading Economics website, housing starts went wild in November 2023. They “soared 14.8% month-over-month to an annualized 1.56 million, the highest rate in six months, and well above market forecasts of 1.36 million.”
Trading Economics also reports that this increase may be due to a decline in mortgage rates and an increase in inventory. They say that housing starts jumped 18% to 1.14 million, breaking the record set in April 2022.
Even so, Reuters reports that total single-family U.S. housing starts are only moderately up by 0.2%, while multi-family starts are up 4.9%.
Will you take advantage of them?
“U.S. single-family homebuilding increased marginally in October, and activity could remain moderate in the near term amid higher mortgage rates, which sent homebuilder confidence tumbling to an 11-month low in November,” according to Reuters. They go on to report that new construction will remain key by “an acute shortage of houses on the market.
Home Builders and Home Sales
“Homebuilders have an opportunity to capitalize on the low supply of homes on the market,” says Chief Economist Jeffrey Roach from LPL Financial in Charlotte, North Carolina. “If mortgage rates move lower in the latter half of next year, we could see some improved demand for residential real estate.”
From a home sales standpoint, Greg McBride, Chief Financial Analyst for Bankrate — a financial advisory company founded in 1976 — mortgage rates have come down from their peak but are still high, and steep home prices are dissuading would-be buyers. He also says that if rates drop in 2024 (and there is a chance they will), that could spur the market for buyers and sellers.
In a blog post on the Bankrate website, McBride says, “As long as the economy continues to motor along, the new normal of higher rates is here to stay. A sharp economic slowdown would bring mortgage rates materially lower — but be careful what you wish for.”
Bankrate reports that the median home sale price as of November 2023 was $387,600, up 4% from one year ago. They state the U.S. inflation rate as of November 2023 was 3.1% — slightly higher than the Federal Reserve’s stated goal of 2%.
Legislative Trends to Note
Several regulatory movements are in play that will impact your High-Performance HVAC business in 2024 and beyond. First is the ever-increasing demand for more efficient equipment (often erroneously called systems), making this one of the most significant contributors to the North American HVAC marketplace.
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Mike,
Great article! I think this is where we fall short because we are not actively letting our customers or perspective customers know the performance side of our HVAC business. We aren’t explaining what sets us apart from other contractors. We will be reaching out through e-blasts, social marketing, and showing our people how to better communicate with customers. If you have any other ideas please let us know.
Thanks for the wake-up call!!
Greg
Thanks for your kind words, Greg. I appreciate them.
Regarding promoting your High-Performance HVAC professionalism, it sounds like you are planning to do the right things when you start reaching out through Social Media, e-blasts, and so on. You may also want to consider promoting some of Dawn’s articles published here as well as the awards and other recognitions GVs has earned from NCI and any other organizations you belong to.