New Home Sales Reach Highest Level Since Great Recession
Sales of newly built, single-family homes rose to their highest level since the Great Recession, up 13.8% to a seasonally adjusted annual rate of 776,000 units in June, according to recently released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The June rate is 6.9% higher than the June 2019 pace.
Inventory fell to a 4.7 months’ supply, with 307,000 new single-family homes for sale, 7% lower than June 2019. The current months’ supply is the lowest since 2016. Of the inventory total, just 69,000 are completed, ready to occupy. The median sales price was $329,200. The median price of a new home sale a year earlier was $311,800.
Regionally, year-to-date, new home sales were up in all four regions: 22% in the Northeast, 12.6% in the Midwest, 0.2% in the South, and 3.1% in the West.
Builders are dealing with a number of supply-side concerns such as rising material costs, particularly lumber, which recently surpassed its 2018 price peak. But low inventory levels point to construction gains ahead.
Residential construction remains one of the bright spots amid the current coronavirus-caused downturn. Economic indicators suggest housing is poised to lead the nation’s economy back to full strength when the current crisis resolves.
Acknowledging Mike McCaughin
The HBCA of Brevard would like to acknowledge Brevard County Building Official Mike McCaughin on his retirement. McCaughin worked for the government for 34 years and was with the Brevard County Building officials for 15 years.
In a victory for NAHB and its members, the Internal Revenue Service recently announced temporary relief from certain requirements under Section 42 of the IRS code for Low-Income Housing Tax Credit (LIHTC) projects.
In general, under IRS Notice 2020-53, deadlines occurring between April 1, 2020, and Dec. 31, 2020, are postponed until Dec. 31, 2020. Agencies are not required to conduct compliance monitoring inspections during this time.
Wade Confirmed as FHA Commissioner
The U.S. Senate voted on July 28 to confirm Dana Wade as the new FHA Commissioner. NAHB Chairman Chuck Fowke lauded Wade’s confirmation amid the challenges caused by the COVID-19 pandemic.
“NAHB looks forward to working with the new FHA commissioner to mitigate the effects of the outbreak on the housing community and to ease regulatory burdens exacerbating the nation’s housing affordability crisis," Fowke said.
Products Used in Home Construction
NAHB analysis of government data indicates that new single-family and multifamily construction used about $94.9 billion in building products in 2019. The vast majority of that amount was produced domestically, supporting jobs in the U.S. manufacturing sector, but about $6.1 billion was imported from other countries. Among the major product categories, new residential construction in 2019 used more than $11 billion each of “cement and concrete products” and “architectural and structural metals.” The analysis looked at 51 building materials categories.
Lumber Prices Hit Two-Year High
The Random Lengths Framing Composite Price hit $523 per 1,000 board feet for the week ending July 10, the first time prices have topped $500 since July 2018. Lumber prices have risen 50% since April 17, 2020.
Several factors are driving rising prices. Some mills closed in the spring due to stay-at-home and social distancing measures. Mills that remained open vastly underestimated demand. Producers did not anticipate the massive uptick in demand from do-it-yourselfers during the pandemic. And housing weathered the storm much better than most anticipated.
NAHB’s 80,000 Associate members account for roughly two-thirds (68%) of total membership.
The largest share of Associate members – 43% – are subcontractors or specialty trade contractors, according to the 2019 annual member census conducted by NAHB’s economics department.
Roughly 13% of Associate members work in professional specialties such as legal services, accounting, and engineering. About 11% work in retail dealerships. Another 8% are employed in various financial services, including banking,
title companies and insurance, and 4% work in wholesale dealerships or distributorships. Roughly 20% listed “other associate” as their primary activity.
The median annual company revenue among Associate members was $2.2 million in 2019, down from a median of $2.5 million in 2018. A quarter of Associates (25%) reported annual revenues under $500,000. The largest group (32%) reported incomes of $1 million to $4.99 million.
The median age of Associates was 56. More than half of Associate members (53%) have earned a bachelor’s degree or higher.
A New Look at Design Standards
Local governments use design regulations to ensure the health, safety and welfare of residents. But excessive regulations that price lower- and moderate-income families out of the market should not be prioritized over the need to address the housing affordability problem.
Examples of highly prescriptive design standards include prohibiting the use of exterior materials such as vinyl siding, mandating minimum roof pitch, and dictating the amount of surface area that must be dedicated to windows.
A new document from NAHB, “Residential Design Standards: How Stringent Regulations Restrict Affordability and Choice,” explains how these standards harm low- and moderate-income families, and suggests policy alternatives.
NAHB, NAR Look at Sustainability
NAHB and the National Association of Realtors® have launched a joint initiative
to inform consumers about the high- performance home market.
Through the joint Home Performance Counts initiative, NAHB and NAR have come together to offer a comprehensive resource that informs consumers about the qualities and benefits of high-performance homes and facilitates communication on home performance between buyers, builders and real estate agents.
Demand for high-performance homes has expanded in recent years, with the number of homes certified to the National Green Building Standard® increasing by more than 57% since 2017. These are homes that prioritize comfort, sustainability, wellness, resource efficiency and affordability.
Subcontractors Largest Share of NAHB's Associate Membership