NAR’s Yun: Housing Starts Are ‘Vastly Inadequate’

NAR’s Yun: Housing Starts Are ‘Vastly Inadequate’
National Association of REALTORS®
article by Daily Real Estate News | March 19, 2018

House 1035Fewer new homes were in the pipeline in February, as housing starts for combined multifamily and single-family homes plunged 7 percent month over month, the U.S. Commerce Department reports. Housing production for the month was at a seasonally adjusted annual rate of 1.24 million units.

“The fall in housing starts in February is a movement in the wrong direction,” says Lawrence Yun, chief economist for the National Association of REALTORS®. “The key to economic prosperity at this juncture of economic expansion is to produce more new homes. That will help with job creation and reduce the swift price appreciation in several markets.”

A total of 1.2 million homes were constructed last year, which Yun calls “vastly inadequate.” February’s figure is just barely above year-ago levels, he adds. “It’s not enough,” Yun says. “While relaxing regulations on small-sized community banks may spur more construction loans for building, labor shortages in the industry continue to stunt overall activity.”

Multifamily production plunged 26.1 percent in February to a seasonally adjusted annual rate of 334,000 units, while single-family starts eked out a 2.9 percent gain to 902,000 units. Still, rising buyer demand, along with record-low inventory, has prompted calls from many in the real estate industry for builders to add more new homes.

Randy Noel, chairman of the National Association of Home Builders, says developers are trying to manage rising construction costs to keep home prices competitive. NAHB Chief Economist Robert Dietz says the uptick in single-family production in February follows the organization’s 2018 forecast for gradual, modest strengthening in the new-construction market.

Combined single-family and multifamily home production rose by the highest amount in the Midwest last month, up 7.6 percent month over month. However, housing starts dropped 12.9 percent in the West, 7.3 percent in the South, and 3.5 percent in the Northeast.

Source: National Association of REALTORS® and National Association of Home Builders; REALTOR® Magazine Online, Daily Real Estate News 031918

Builders Reveal Top 10 Biggest Concerns

Builders Reveal Top 10 Biggest Concerns
National Association of Home Builders   article by Daily Real Estate News | January 17, 2018

House Construction 103Homebuilding is still falling short in many markets in alleviating the shrinking inventories of homes for sale. But builders are blaming the construction shortfall on several factors.

Builders revealed the following top 10 “significant” problems they expect to face in 2018, according to the National Association of Home Builders and Wells Fargo Housing Market Index:

  1. Cost/availability of labor: 84%
  2. Building material prices: 84%
  3. Cost/availability of developed lots: 62%
  4. Impact/hook up/inspection or other fees: 60%
  5. Local/state environment regulations and policies: 45%
  6. Inaccurate appraisals: 42%
  7. Federal environment regulations and policies: 42%
  8. Difficulty obtaining zoning/permit approval: 42%
  9. Gridlock/uncertainty in Washington making buyers cautious: 42%
  10. Development standards (parling, setbacks, etc.): 38%

Once again for 2018, builders said the cost and availability of labor is their chief concern. The number of builders who are reporting this as a problem is growing. In 2017, 82 percent of builders said cost and availability of labor was their top concern; the percentage has grown to 84 percent of builders heading in 2018.

The availability of labor started growing as a problem among builders since 2011. In 2011, just 13 percent of builders rated labor as a significant problem, but by 2012, the percentage jumped to 30 percent and has ever since continued to increase each year.

“Both the availability of labor and lots highlight the expected constraints of a recovering housing market,” the NAHB reports.

Source: “Building Materials Prices and Labor Access Top Challenges for 2018,” National Association of Home Builders’ Eye on Housing blog (Jan. 16, 2018); REALTOR® Magazine Online, Daily Real Estate News 011718

New Homes Have Gotten Pricier

New Homes Have Gotten Pricier
Article by Daily Real Estate News | April 5, 2017

HomeConstruction500wOver the last 10 years, the price distribution of new homes has changed significantly, as new homes have grown more expensive. Builders blame a weakness among first-time buyers and rising regulatory burdens as the reason for the shift in focus in the pricier tiers of the new-home sector following the Great Recession.

The number of new homes that sold for less than $250,000 started to decline prior to the Great Recession. Sales in this segment have not returned to levels set in 2006, particularly for homes with prices below $149,000, according to an analysis by the National Association of Home Builders, detailed on its Eye on Housing blog.

Indeed, new homes that sold for $150,000 to $199,999 and those that sold for $200,000 to $249,000 dropped to a low during the recession. They have been on a slow, recovering pace ever since, the NAHB notes.

The main drivers in the new-home market are homes that sold above $250,000. New homes priced between $300,000 and $399,000 had the highest volume prior to the Great Recession and have been the fastest to recover since then, the NAHB notes.

Source: “New Home Sales Price History,” National Association of Home Builders’ Eye on Housing blog (April 4, 2017); National Association of REALTORS®, Daily Real Estate News 040517

KENNETH BARGERS REALTOR® License 318311 | Pilkerton Realtors License 257352
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New Single-Family Homes Are Getting Smaller

New Single-Family Homes Are Getting Smaller
Article by Daily Real Estate News | August 17, 2016

NAHB-LogoThe average size of new single-family homes is dropping, reversing an upsizing trend in residential construction. Builders say this is happening because their industry is taking more interest in the entry-level market and not just catering to the luxury sector any longer. A growth in townhomes, which are typically smaller than traditional homes, is part of the reason for the decreased size, builders say.

The median single-family square floor area dropped from 2,465 in the first quarter to 2,392 square feet in the second quarter, according U.S. Census data. The average square footage for new single-family homes dropped slightly from 2,658 to 2,616 square feet.

The builder’s trade group says home sizes are following a pattern for what typically occurs during and after a recession. “New-home size falls prior to and during a recession as some home buyers tighten budgets, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportion,” Robert Dietz, chief economist of the National Association of Home Builders, notes at the group’s Eye on Housing blog. “This pattern was exacerbated during the current business cycle due to market weakness among first-time homebuyers. But the recent small declines in size indicate that this part of the cycle has ended and size should trend lower as builders add more entry-level homes into inventory.”

Source: “New Single-Family Home Size Declining,” National Association of Home Builders’ Eye on Housing blog (Aug. 16, 2016); REALTOR® Magazine Online, Daily Real Estate News 081716

KENNETH BARGERS REALTOR® License 318311 | Pilkerton Realtors License 257352
(615) 512-9836 cellular • (615) 915-5901 facsimilekb@bargers-solutions.com email
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(615) 371-2474 office • (615) 371-2475 facsimile • 2 Cadillac Drive, Brentwood TN 37027 address

More New Homes Are Entering the Pipeline

More New Homes Are Entering the Pipeline
Article by Daily Real Estate News | May 18, 2016

NAHB-LogoNationwide housing starts climbed 6.6 percent last month to a seasonally adjusted annual rate of 1.17 million, according to Commerce Department data released Tuesday. Permits, a gauge of future construction, also jumped 3.6 percent month over month, showing the uptick will likely stay.

“Though housing construction data is relatively flat for the beginning of 2016, we anticipate a ramping up of housing production during the rest of the year, given a strengthening job market, low mortgage interest rates, and favorable demographics,” says Robert Dietz, chief economist for the National Association of Home Builders.

Single-family and multifamily starts both saw gains in April. Housing starts on single-family homes jumped 3.3 percent to a seasonally adjusted annual rate of 778,000 units. Multifamily starts, a more volatile sector, rose 13.9 percent to 394,000 units, the Commerce Department reported.

The bulk of the increase in single- and multifamily housing stats was in the Midwest and South. The Midwest saw a 22.2 percent month-over-month increase in housing starts, while the South saw a 14.1 percent boost. On the other hand, the Northeast saw starts drop 7.6 percent last month, while the West posted a 10 percent loss.

Housing permits, however, were up in all four regions in April, led by the largest gains in the West with a 4.7 percent month-over-month permit gain. The Midwest and South both registered 3.3 percent increases in permit issuance, and the Northeast saw a 3 percent increase.

Source: National Association of Home Builders; REALTOR® Magazine Online, Daily Real Estate News 051816

Kenneth Bargers, REALTOR® | Pilkerton Realtors
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How Did Housing Really Do in 2015?

How Did Housing Really Do in 2015?
Article by Daily Real Estate News | January 08, 2016

HouseForSaleThe housing market improved in 2015, but how close is it to finally being back to normal? Jonathan Smoke, chief economist at realtor.com®, weighs in on how the housing market fared last year.

Existing home sales: Existing-home sales were up 7 percent in 2015, buoyed by strong household formation (at about 1.4 million households formed in the past four quarters ending in September) and strong job growth. Distressed sales fell in 2015, as did sales to investors, international buyers, and second-home buyers, Smoke notes.

Home prices: Home prices edged up 5 percent to 7 percent nationwide in 2015. “Such appreciation helped owners see substantial gains in equity,” Smoke writes. “Home values are close to being fully recovered nationally.”

But the level of price appreciation is above a normal rate, mostly due to an imbalance in the number of homes for-sale and high demand.

New-home construction: New-home sales were up 13 percent in 2015. Most of the growth in new-home construction in 2015, however, was centered in apartment building rather than single-family homes.

“Even with more than 20% growth in total new construction, we will have created only a net new 900,000 housing units, which is less than 65 percent of the new households we created,” Smoke notes.

Rental market: Many of the new households forming are renters. Apartment vacancies are at multi-year lows, and rents are rising sharply. That is worrisome, Smoke says, because “when renting households are so burdened by making rent payments, they’re less able to save up to own.”

Nevertheless, affordability, overall, remained strong by the end of 2015, despite the higher home prices.

“Looking across the national housing landscape, the housing market has stronger fundamentals now than one year ago,” Smoke says. “However, we need new construction to keep up with the household formations driven by demographics and healthy job creation. We need more affordable housing to decrease the impact of burdensome rents. And we need expanded, risk-appropriate access to credit to help households that can afford to buy.”

Source: “The Housing State of the Union: We’re Back, Baby!” realtor.com® (Jan. 7, 2016); REALTOR® Magazine Online, Daily Real Estate News 010816

Kenneth Bargers, REALTOR® | Pilkerton Realtors
(615) 512-9836 cellular (615) 371-2474 office kb@bargers-solutions.com email
www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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Job Growth to Finally Boost Homebuilding?

Job Growth to Finally Boost Homebuilding?
Article by Daily Real Estate News | December 14, 2015

HouseConstructionThe construction industry is poised for one of the largest leaps in employment growth over the next decade, according to the Bureau of Labor Statistics. The construction sector is expected to add 790,400 jobs through 2024 – the fourth highest job growth projection among major industries, according to BLS.

The health and social assistance sector leads with a projected 3.8 million job gain, followed by professional and business services (1.9 million), and the leisure and hospitality sector (941,200).

“In percentage terms, the construction sector ranks second in terms of expected growth,” the National Association of Home Builders reports on the findings. “The construction industry is expected to experience 1.2 percent compounded annual growth for jobs over 2014-2024. Only the health and social assistance industry (1.9%) exceeds this growth rate.”

However, even with the uptick, employment in the construction sector still would not be pushed above 2004 levels. From 2004 to 2014, about 837,800 construction jobs were lost on a net basis.

Within the construction occupation, some of the top-growing jobs expected overt he next decade include solar photovoltaic installers (24.3% total growth over 10 years), iron/rebar workers (23.4%), insulation workers (19.4%), brickmasons and blockmasons (17.9%), electricians (13.7%), and earth drillers (13.6%).

BLS also offers projections on other real estate-related occupations over the 2014-2024 period, including forecasts of a net job growth of 349,800 (6.2%) for building and grounds maintenance occupations; 25,300 (8.1%) for property and real estate managers; 9,000 (6.7%) for architects; 2,200 (3.8%) for interior designers and 10,900 (2.6%) for real estate brokers and sales agents.

Source: “Construction Sector a Leader for Job Growth Over the Next Decade,” National Association of Home Builder’s Eye on Housing Blog (Dec. 8, 2015); REALTOR® Magazine Online, Daily Real Estate News 121415

Kenneth Bargers, REALTOR® | Pilkerton Realtors
(615) 512-9836 cellular (615) 371-2474 office kb@bargers-solutions.com email
www.bargers-solutions.com web kennethbargers.com blog
2 Cadillac Drive, Brentwood Tennessee address

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