Builders by and large wind up 2023 feeling cheery about what's ahead.

For a big clue of just how bullish they are, look no further than at their redoubled focus on land – getting it, getting it right, and transforming it into every homebuilding operator's most basic business building block "inventory turns."

Amid a wide-scale pivot in macro land positioning and strategy toward self-sustaining asset-light operations, builders' specific focus on land as a front-end investment in their value creation cycle comes through loud and clear in their current commitments to expanding capability, i.e. people.

When I look at the lion's share of our work with the homebuilders right now, there's a lot of land acquisition and development, particularly among managers and directors at the tactical level," says Thomas Carpitella, CEO of FTS, a supporting partner of The Builder's Daily. "That's a great sign. Builders are not only leveling up, but they also happen to be adding headcount against land acquisition, high-level VPs of finance, and controller roles, in preparation for what they anticipate will be a year of aggressive growth."

According to Carpitella, market and submarket land capability – technical expertise, deep local relationships networks with land sellers, brokers, and developers, and team skills that mesh with community and product architecture, construction, marketing, customer care, and sales – is running at a premium now as builders pair up their priority focus on both operational improvements and growth in the coming year and beyond.

The builders have their strategies set, " Carpitella adds. "They need to assure themselves of having team members who can execute at the highest level in ways that ripple across their business and operational building lifecycle. Demand for talented people at that level is extremely competitive right now because they're the ones who put all the pieces together and make the strategy happen."

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The most recent homebuilder sentiment reading from the National Association of Home Builders/Wells Fargo Housing Market Index rose off its 2023 lows on the strength of the Federal Reserve pivot to level or lower its funds rate trajectory.

Writes NAHB chief economist Robert Dietz:

With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic. The housing market appears to have passed peak mortgage rates for this cycle, and this should help to spur home buyer demand in the coming months, with the HMI component measuring future sales expectations up six points in December."

Of course, the prospect of lower borrowing costs works favorably across two streams of impact for homebuilders, 1) Their own cost-of-capital as an expense and cash flow management stream, and 2) New would-be homebuyers capable of qualifying based on more manageable monthly payment levels and loan-to-value ratios.

Experts suggest that while home mortgage loan average rates are likely to trail downward to where more non-contingent new homebuyers will price in, they won't fall so far as to cause existing homeowners – locked into historically low rates – to suddenly feel motivated to release and step into the resale market.

For that reason, and the expectation that buyers will continue to respond to mortgage rate buydowns and other buyer incentives, builders feel that 2024's setting up for a year in which they'll play on offense rather than one where they'll have to focus on mitigating risk and defending against threats.

The caveat practically everybody has top of mind is that every scenario comes paired up with ongoing uncertainty and volatility, both of which heighten organizations' need for execution and operational excellence at both their leadership and staff levels. With data and tech solutions in the hands of each part of the value-cycle, teams become increasingly accountable for business outcome results rather than vertically-focused, task-oriented performance.

In particular, the land game's new rules require its players to recognize, value, and execute predictively and repeatedly the end-to-end digital thread between every lot and its potential homebuying customer, with a full-stack understanding and engagement in every hand-off and every process in between. That's the kind of tactical and operational excellence operators are on the look-out for right now.

"That big push is land acquisition, finance, and accounting," Carpitella says. "That tells me they're planning on another bang-up year."

No different than at any time except insofar as they're win-or-lose benchmarks in an overall economic and competitive backdrop that builds lower margin-of-error tolerances into sustainable success, here are qualities teams will need to draw on to withstand the turbulence and to hop on opportunity as it surfaces in 2024.

• Agility
• Nimbleness
• Care
• Flexibility
• Velocity
• Teamwork
• Resiliency
• Enterprise
• Opportunism
• Leadership

Homebuilding in 2024 stands at a pivotal juncture where operational excellence, agile execution, and robust team accountability are not just advantageous but essential for thriving in an increasingly competitive landscape. By prioritizing the evolution and upskilling of human capital, firms can transform their workforce from task-oriented silos into cohesive units focused on holistic business growth. This shift demands a cultural embrace of continuous learning, adaptability, and a forward-thinking mindset. As the industry navigates through the dynamics of market opportunities and risks, the resilience and commitment to continuous improvement will distinguish the leaders from the rest.

Ultimately, the success of homebuilding enterprises will hinge on their ability to foster an environment where every team member is engaged, accountable, and aligned with the collective goal of driving operational progress. This strategic approach will not only enhance operational efficiency but also ensure sustainable growth and long-term success in the ever-evolving world of homebuilding and residential development.