Single-Family Production Pushes Housing Starts Up in August

NAHB Press Releases

WASHINGTON, Sept. 18 - Led by a solid increase in single-family starts, nationwide housing production rose 0.9 percent to a seasonally adjusted annual rate of 891,000 units in August, according to figures released today by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Meanwhile, construction of multifamily buildings slowed following a rebound in the previous month.

"Overall, this is an encouraging report as builders are seeing pent-up demand begin to be released for single-family homes despite headwinds such as rising mortgage rates and tight credit conditions," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.

"This is the kind of signal we've been looking for, with single-family starts and permits up or holding steady across every region in the nation," said NAHB Chief Economist David Crowe. "Today's report is reflective of gradual improvement in buyer confidence in the overall market and our recent surveys that indicate a solid outlook for single-family production. On the multifamily side, we are catching up with underlying rental demand. We expect to see additional multifamily starts in the future, but not as rapid a pace of growth as we've seen in the past."

Single-family housing starts rose 7 percent to a 628,000 unit pace. Regionally, single-family starts activity rose 9.6 percent in the Northeast, 7.1 percent in the Midwest, 2.3 percent in the South and 17.5 percent in the West.

The annualized rate of multifamily production fell 11.1 percent to a seasonally adjusted annual rate of 263,000 units.

Overall building permits, which are an indicator of future building activity, declined 3.8 percent to 918,000 units in August. This was due entirely to a pullback in the multifamily sector, where permits fell 15.7 percent to 291,000 units. Single-family permits posted a 3 percent gain to 627,000 units - the best pace since May of 2008.

Regionally, single-family permit issuance increased 2.9 percent in the Midwest, 2.5 percent in the South, 5.3 percent in the West and held steady in the Northeast.

Shortage of Lots Slows Housing Recovery

NAHB Press Release

WASHINGTON, Sept. 4--A shortage of buildable lots, especially in the most desirable locations, has emerged as one of the key factors holding back a more robust housing recovery, according to the latest survey on the topic conducted by the National Association of Home Builders (NAHB).

"In our August 2013 survey, 59 percent of builders reported that the supply of lots in their markets was low or very low--up from 43 percent September of last year, and the largest low supply percentage we've seen since we began conducting these surveys in 1997," said NAHB Chief Economist David Crowe. "One reason is that many residential developers left the industry, abandoned certain markets or simply stopped buying land and developing lots during the downturn."

The 59 percent includes 39 percent who characterized the supply of lots simply as "low" and 20 percent who said the supply of lots was "very low." Another 22 percent said the supply of lots was "normal," 10 percent said it was "high" and four percent said "very high." Six percent said they didn't know or weren't sure.

The survey found that lot shortages tended to be especially acute in the most desirable, or "A," locations. Thirty-four percent of builders said that the supply of A lots was very low, compared to 18 percent for lots in B and 12 percent for lots in C locations.

The shortages have also translated into higher prices for builders who are able to obtain developed lots to build on. In the same survey, 34 percent of home builders said the price of developed A lots was somewhat higher than it was a year ago, and 26 percent said the price was substantially higher. In comparison, 15 percent of builders said the price of B lots was substantially higher than a year ago, and 11 percent said the price of C lots was substantially higher. Ultimately, higher lot prices are passed on to buyers in the form of higher house prices.

The shortage of buildable lots has emerged against the backdrop of a housing recovery that is still modest by historical standards. To this point, housing starts have recovered from a low of 550,000 in 2009 to an annual rate of just fewer than 900,000 in the Census Bureau's latest release. Historically, starts averaged more than 1.5 million a year from 1960-2000, without ever plunging below 1 million until 2008.

"There is still a substantial pent-up demand for housing waiting to be unleashed as the overall economy and labor situation improves," said Crowe. "Lot shortages are one of several barriers that have arisen, restraining builders from responding completely to increased demand. Other barriers include a shortage of labor in carpentry and other key building trades, limited availability of loans even for credit worthy home builders and home buyers; and, more recently, an uptick in interest rates."

Builder Confidence Rises Three Points in August

NAHB Press Release

WASHINGTON, Aug. 15 - Builder confidence in the market for newly built, single-family homes rose three points to 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today. This fourth consecutive monthly gain brings the index to its highest level in nearly eight years.

"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."

"Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets," noted NAHB Chief Economist David Crowe. "However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor."

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Two of the HMI's three components posted gains in August. The component gauging current sales conditions rose three points to 62, while the component gauging sales expectations in the next six months gained a single point to 68 and the component gauging traffic of prospective buyers held unchanged at 45.

All but one region saw a gain in its three-month moving average HMI score in August. The Midwest and West each posted six-point increases, to 60 and 57, respectively, while the South posted a four-point gain to 54 and the Northeast held unchanged at 39.

Editor's Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found atnahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

Builder Confidence in the 55+ Housing Market Shows Significant Improvement in Second Quarter

NAHB Press Release

WASHINGTON, Aug. 8 - Builder confidence in the 55+ housing market for single-family homes showed strong continued improvement in the second quarter of 2013 compared to the same period a year ago, according to the National Association of Home Builders' (NAHB) latest 55+ Housing Market Index (HMI) released today. The index increased 24 points to a level of 53, which is the highest second-quarter number since the inception of the index in 2008 and the seventh consecutive quarter of year over year improvements.

"Builders and developers for the 55+ housing sector are feeling optimistic as they are seeing more consumers return to the marketplace," said Robert Karen, chairman of NAHB's 50+ Housing Council and managing member of the Symphony Development Group. "With existing home prices rising, consumers are able to sell their current homes and make the move toward either purchasing a home or renting an apartment that is designed to more specifically suit their lifestyle."

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums. Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic). An index number below 50 indicates that more builders view conditions as poor than good.

All of the components of the 55+ single-family HMI showed major growth from a year ago: present sales climbed 24 points to 54, expected sales for the next six months increased 25 points to 60 and traffic of prospective buyers rose 26 points to 48.

The 55+ multifamily condo HMI posted a substantial gain of 24 points to 43, which is the highest second-quarter reading since the inception of the index. All 55+ multifamily condo HMI components increased compared to a year ago as present sales rose 26 points to 44, expected sales for the next six months climbed 26 points to 46 and traffic of prospective buyers rose 19 points to 38.

The 55+ multifamily rental indices also showed strong gains in the second quarter as present production increased 19 points to 50, expected future production rose 20 points to 52, current demand for existing units climbed 20 points to 62 and future demand increased 21 points to 63.

"The 55+ HMI for single-family homes almost doubled from a year ago," said NAHB Chief Economist David Crowe. "Sentiment in other segments of the 55+ market housing was strong as well. This is consistent with the increase in builder confidence we've seen in other NAHB surveys recently. At this point, the main challenge for builders in many parts of the country is finding enough buildable lots in desirable locations and workers with the necessary skill set to respond to the increased demand."

Builders and Lumber Dealers See Shortages of Key Building Materials

NAHB Press Release

WASHINGTON, June 19 - Home builders and lumber dealers are reporting significant shortages of key home building materials such as lumber and wall board, according to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA).

"Supply constraints are one of the barriers to a more robust recovery," said NAHB Chief Economist David Crowe. "The shortages and price increases reported by both home builders and lumber dealers are particularly concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand."

Among builders, the highest incidence of shortages was for oriented strand board (OSB), with 22 percent of builders reporting shortages, followed by wall board (20 percent), framing lumber (18 percent) and plywood (18 percent). The builder results come from special questions added to the monthly survey that serves as the basis for the NAHB/Wells Fargo Housing Market Index (HMI), which is widely viewed as a key indicator of the overall strength of the home building market.

With the exception of wall board, the lumber dealers reported greater shortages of these products than the home builders. Among lumber dealers, 27 to 28 percent reported shortages of OSB and plywood, 36 percent reported shortages of framing lumber and 12 percent reported shortages of wall board. The dealer results come from a special survey of NLBMDA's members, who operate single or multiple lumber yards and component plants and deal in many of the same products that NAHB members purchase.

Both the builder and lumber dealer surveys asked about shortages of 24 specific building products and materials. For most of the products, the share of builders reporting a shortage was considerably higher in May of 2013 than in 2011 or 2012. The only exceptions were copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels.

"The shares of reported shortages are not as high now as they were in 2004 or 2005, but the increases since 2012 are quite significant, especially when you take the early stage of the housing recovery into account," said Crowe. "In 2004 and 2005 the home building industry was producing over 1.8 million new homes a year, while the current rate of new housing starts is still below 1 million."

With the exception of concrete-related products, a larger share of lumber dealers than builders reported price increases in building materials over the past six months. On average, builders reported a 5.17 percent increase in the materials that go into a house over the past six months. Most lumber dealers reported that the prices of the products they handle had increased on average by 10 percent or more over the past six months.

"While a nascent housing recovery is underway, as reflected by the modest increase in sales by dealers, it's clear that the ongoing material shortages and price increases being reported by dealers continue to be a cause for concern as we move into the latter half of 2013," said Michael O'Brien, NLBMDA president and CEO.

The reported results reflect survey data collected from NAHB builders and NLBMDA dealers during the first half of May; 383 builders and 230 dealers provided responses. For more information or a copy of the complete report covering both surveys, contact Paul Emrath at 800-368-5242 x8449.

Home Builders Building Homes that Young Buyers Want, Says NAHB

NAHB Press Release

WASHINGTON, June 3 -- During National Homeownership Month in June, the National Association of Home Builders (NAHB) is telling young people that the time is right to buy a home, and the nation's builders are building the homes they want.

"As the economy recovers and young people who had to live at home with their parents move forward with their lives and achieve their dreams of homeownership, home builders are delivering homes that cater to the floor plans, features and affordability that this generation desires," said NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C.

More than 80 percent of Generation Y home buyers--people born in 1977 or later--said in NAHB's 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home's lifetime over a lower-priced home without energy efficient features. Today's new homes feature ENERGY STAR-rated appliances; windows, doors and insulation that better control the home's interior climate; and other modern components such as tankless water heaters and HVAC systems that save costs on utility bills.

And cost-conscious young buyers will be happy to hear that a new home actually costs less to maintain than an older home. An NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Plus, mortgage rates are still very low, bolstering affordability for home buyers.

Generation Y buyers favor media and game rooms more than any other specialty rooms for their next home. New homes today not only contain these spaces, they are outfitted with the state-of-the-art electronic and wiring components that can accommodate high-definition televisions, full-house sound systems, hard-wired fire and security alarms and more.

Young buyers can check out many of the outstanding designs and features being included in homes built by NAHB members at our social media communities facebook.com/homebuildrs, pinterest.com/nahbhome and google.com/+nahb. They can also access home buying and home building information and resources on NAHB's website atnahb.org/forconsumers.

"The time has never been better for young people to become home owners, whether it be a new home or existing," said Judson. "There are outstanding opportunities in the current market, with near record low interest rates, competitive prices and new homes being built that include open layouts, energy efficient components and other features that cater to young buyers."