December 2021
Builder Confidence in Market Rises in November
Low existing inventories and strong buyer demand helped push builder confidence higher for the third consecutive month even as supply-side challenges — including building material bottlenecks and lot and labor shortages — remain stubbornly persistent. Builder sentiment in the market for newly built single-family homes moved three points higher to 83 in November, according to the NAHB/Wells Fargo Housing Market Index (HMI) released Nov. 16. Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI 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 for 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. The HMI index gauging current sales conditions rose three points to 89 and the gauge charting traffic of prospective buyers also posted a three-point gain to 68. The component measuring sales expectations in the next six months held steady at 84.
Fed Begins to Taper MBS Purchases The Federal Reserve has supported the housing market during the pandemic with asset-backed purchases (among other tools), including $40 billion a month of mortgage-backed security purchases. These purchases have helped keep interest rates low. Beginning in November, the Fed began reducing the monthly volume of such purchases by $5 billion. The Fed is also reducing its purchases of Treasuries by $10 billion a month. These actions will put upward pressure on interest rates.
Two Great Reasons To Attend 2022 IBS Tours of the 2022 New American Home and New American Remodel are two great reasons to attend the NAHB International Builders’ Show® (IBS), Feb. 8-10, 2022, in Orlando. The two show homes offer a look at innovative construction methods, design trends and exciting new products. Make plans now to attend the Builders’ Show IN PERSON. Visit buildersshow.com to register and to get more information. Commerce to Double Tariffs on Lumber In a blow to housing affordability and a move strongly opposed by NAHB, the Commerce Depart- ment in November moved forward with its next adminis- trative review to double the tariffs on Canadian lumber shipments into the U.S. from 9% to 17.9%. “With the nation in the midst of a housing affordability crisis, the Biden administration has moved to slap a huge, unwanted tax hike on American home buyers and renters by doubling the tariffs on Canadian lumber shipments into the U.S.,” NAHB Chairman Chuck Fowke said in a statement.
NAHB Challenges OSHA Vaccine Rule NAHB in November filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit asking the court to examine OSHA’s emergency temporary standard (ETS) requiring companies with more than 100 employees to mandate COVID-19 vaccinations or weekly testing. There are also many other legal challenges across the United States. NAHB believes that OSHA does not have the authority to issue an ETS on this matter. But barring a long-lasting injunction, employers will have to comply with many parts of the rule by Dec. 6
President Signs Infrastructure Bill President Biden on Nov. 15 signed into law a bipartisan, $1.2 trillion infrastructure package. The bill includes a key measure championed by NAHB that will restore an exemption for water and sewer contributions in aid of construction. NAHB supported the bill, which will fund much-need improvements to the nation’s roads, bridges and public transportation. The measure advances efforts to increase energy efficiency and reduce greenhouse gas emissions without excessive energy code mandates.
Enhance Your Business with Insights from the NAHB Ideas App
Materials Prices Climbing The price of all goods inputs to residential construction (including energy) has risen 14.5% thus far in 2021, eight times more than it did over the first 10 months of last year. The year-to-date increase is twice that of the previous record year-to-date October increase (+7.1% in 2008). The PPI for softwood lumber increased 9.1% in October. Gypsum product prices are up 19.0% YTD, by far the largest October YTD increase since seasonally adjusted data became available in 2012. And over the 80-year period ending in 2020, the monthly change in the steel mill products PPI increased by more than 10% only three times (in 1947, 1948, and 2008). Monthly increases have exceeded that mark four times in 2021.
Get up to speed on the latest industry trends and professional development skills with the NAHB Ideas app. Recent articles have touched on everything from handling disruptions in the housing market to en- hancing your leadership and management skills to understanding the impact of land use regulations on housing inequities. New content this month includes: Adapting to Change in the Remodeling Industry The Future of Aging-in-Place Design Looking for more insights? Articles are categorized into issue areas such as building techniques and strategies, project management, research and trends, and more, to make them easy to find. Users also can now share helpful articles through email, text message and more using the sharing tool at the top of the app screen. The app is available on the Apple App Store and Google Play Store for Android. Search the keyword “NAHB,” then select “GET.”
Multifamily Confidence Improves Confidence in the market for new multi- family housing improved in the third quarter, according to results from the Multifamily Market Survey (MMS) released Nov. 18 by NAHB. The MMS produces two separate indices. The Multifamily Production Index (MPI) increased five points to 53 compared to the previous quarter. The Multifamily Occupancy Index also increased by five points, up to 75 – the highest reading since the inception of the index in 2003. The MPI measures builder and developer sentiment about current conditions in the apartment and condo market on a scale of 0 to 100. The index is scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.
A lack of skilled construction labor is a key limiting factor for improving housing inventory and affordability, according to the Home Builders Institute’s (HBI’s) Fall 2021 Construction Labor Market Report released in November. The construction industry needs more than 61,000 new hires every month to keep up with both industry growth and the loss of workers either through retirement or to other opportunities. Roughly 740,000 new construction workers need to be added per year for the next three years to keep pace with demand, based on NAHB analysis of Bureau of Labor Statistics data. Key findings include: • The number of open construction sector jobs currently averages between 300,000 to 400,000 each month. • Half of the payroll workers in construction earn more than $50,460 annually and the top 25% make at least $71,000. In comparison, the U.S. median wage is $49,150 while the top 25% make at least $67,410. • Construction employment currently totals 7.42 million. Residential construction represents 3.1 million of this total. • Self-employment in construction is currently 22% of the labor force, down from 26% in 2010. • The share of immigrants in construction trades is 30%. • The share of Women in construction is 10.9%. • The median age of construction workers is 41. However, due to aging trends, the share of construction workers aged 25 to 54 decreased from 72.2% in 2015 to 69.0% in 2019.
New HBI Report Highlights Depth of Labor Shortage
News You Can Use Welcome to News You Can Use.If you have anything you would like to share with our members, please send to:candice@capecodbuilders.org 1.The Habitat for Humanity Blitz Build is happening again in 2022! Falmouth is the location and the time frame is mid September.You will be hearing lots more about this very cool project very soon. 2.Member request:Please Like our Facebook page and Follow Us on Instagram.If you do so, you will get regular updates on upcoming events and info sessions.Don’t miss the chance to stay inform 3.Need help with marketing/advertising?We have relationships with most media outlets here on Cape, as well as experience in video production, digital, print and radio campaigns.We are planning a Marketing 101 virtual session soon, so please let us know if interested.