Builders risk coverage — also known as course of construction insurance — is a proven way to protect against the unique risks that endanger residential and commercial new construction, remodeling and installation projects. It usually combines standard coverages and optional endorsements to customize coverage for a specific risk and is based on area exposures. (Michael Flippo/Adobe Stock) Builders risk coverage — also known as course of construction insurance — is a proven way to protect against the unique risks that endanger residential and commercial new construction, remodeling and installation projects. It usually combines standard coverages and optional endorsements to customize coverage for a specific risk and is based on area exposures. (Michael Flippo/Adobe Stock)

Even though the current home construction market might be deemed complicated, make no mistake — the long-term trend in residential construction is onward and upward. One key reason: Construction of more than 5 million homes is needed in the U.S. to meet the demands of those who want to buy a residence this year.

Before diving into the nature of this opportunity, it’s important to understand the challenges that accompany it. Total housing starts spiked at 1.6 million in 2021, up 15.6% from 2020, and the highest reported since 2006. Continuing to meet that demand in 2022 was an uphill battle because of multiple competing forces including the lingering effects of the COVID-19 pandemic, tight conditions in the construction labor markets, and a steep increase in inflation and mortgage rates. In fact, these elements actually pulled construction activity back down from 2021 highs. According to Wells Fargo, housing starts were projected to close 2022 at 1.57 million and forecast to fall to 1.43 million in 2023.

 

PropertyCasualty360

Join PropertyCasualty360

Don’t miss crucial news and insights you need to make informed decisions for your P&C insurance business. Join PropertyCasualty360.com now!

  • Unlimited access to PropertyCasualty360.com - your roadmap to thriving in a disrupted environment
  • Access to other award-winning ALM websites including BenefitsPRO.com, ThinkAdvisor.com and Law.com
  • Exclusive discounts on PropertyCasualty360, National Underwriter, Claims and ALM events

Already have an account? Sign In Now
Join PropertyCasualty360

Copyright © 2023 ALM Global, LLC. All Rights Reserved.