Expect More

Implications: Job reductions at builders have a multiplier effect on overall construction job losses, as lower levels of building activity impact the trade base.

Job reductions will continue until organizations find the appropriate staffing level to match building volumes.


Analysis: Net new orders continue to fall at all the large builders. As current backlog is built out, margins continue to shrink due to price cuts and higher incentives, and new orders continue to drop YOY, expect more of the same. Some markets will be hit harder than others, but the implications of this go beyond overhead reductions at the builders. For every head count reduction at a builder, there are subcontractors and vendors that are also being impacted, and those staffing reductions don't show up in the headlines.

Until net new orders stabilize, builders will continue to try and "right size" their organizations to the new volume realities.