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A Suburban Shift for Home Building

A Suburban Shift for Home Building

Coronavirus has altered the home buying and building preferences according to this article from the National Association of Home Builders. More and more people than ever before have been forced to work from home during the pandemic. When working remotely why live in the city when you can live in less densely populated areas? 

A Suburban Shift for Home Building

Evidence of a suburban shift for consumer home buying preferences as a result of the COVID-19 pandemic can be found in the second quarter National Association of Home Builders (NAHB) Home Building Geography Index (HBGI).

“The increasing demand for construction in more suburban neighborhoods is being driven in large part by the coronavirus outbreak,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “The growing trend for working at home is enabling more families to choose to live in lower cost, lower density communities. Moreover, persistent housing affordability challenges exacerbated by soaring lumber prices that have added $16,000 to the price of a single-family home since mid-April are adding to the need to find affordable housing in lower cost markets.”

“The county-level second quarter HBGI data shows relative growth in lower density markets that represent half of all single-family construction,” said NAHB Chief Economist Robert Dietz.“ We saw initial evidence of this trend in the first quarter, and in recent months these markets have registered faster growth for both single-family and multifamily building, as the demand for new construction shifted to more suburban and exurban communities.”

The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural regions.

Small metro suburbs accounted for the fastest growing geographical areas for single-family construction during the second quarter, up 10.6 percent on a four-quarter moving average basis. This was followed by small towns (9.3 percent), small metro core areas (7.5 percent) and exurbs (5.6 percent).

Other second quarter HBGI findings show:

  • In the second quarter, single-family housing starts fell by 24 percent on quarterly basis. Of the seven regional geographies, only small metro area suburbs posted a year-over-year gain in this quarter, while the others registered declines, the biggest of which occurred in large metro core areas.
  • The market share for single-family construction in low density areas (small metro core and suburbs, small towns and rural markets) increased from 47.5 percent a year ago to 48.4 percent.
  • The fastest growing geographies for apartment construction in the second quarter were found in the exurbs, small metro suburbs and rural areas.
  • The market share for multifamily construction in low density areas (exurban areas of large metro markets, small metro core and suburbs, small towns and rural markets) increased from 32.9 percent a year ago to 34 percent.

Although the year-to-year changes in single- and multifamily market shares in low density areas are seemingly small, changes in market share are usually slow to develop. This makes a one-percentage point year-over-year gain noteworthy, when compared to recent historical data.

Builder Confidence Surges in June as Housing Rebound is Underway

Builder Confidence Surges in June as Housing Rebound is Underway

In a recent article from the National Association of Home Builders, it is reported that builder confidence continues to rise as the nation continues to open up and more and more people are back to work. Housing continues to be a contributing force in the economic recovery following the collapse from Covid-19. Read below for the full article from the NAHB.

In a sign that housing stands poised to lead a post-pandemic economic recovery, builder confidence in the market for newly-built single-family homes jumped 21 points to 58 in June, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. Any reading above 50 indicates a positive market.

“As the nation reopens, housing is well-positioned to lead the economy forward,” said NAHB Chairman Dean Mon, a home builder and developer from Shrewsbury, N.J. “Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising. And buyer traffic more than doubled in one month even as builders report growing online and phone inquiries stemming from the outbreak.”

“Housing clearly shows signs of momentum as challenges and opportunities exist in the single-family market,” said NAHB Chief Economist Robert Dietz. “Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods. At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”

Derived from a monthly survey that NAHB has been conducting for 30 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 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.

All the HMI indices posted gains in June. The HMI index gauging current sales conditions jumped 21 points to 63, the component measuring sales expectations in the next six months surged 22 points to 68 and the measure charting traffic of prospective buyers vaulted 22 points to 43.

Looking at the monthly average regional HMI scores, the Northeast surged 31 point to 48, the South jumped 20 points to 62, the Midwest posted a 19-point gain to 51 and the West catapulted 22 points to 66.

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 at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

Builder Confidence Holds Steady in March

In this recent press release from the National Association of Home Builders (NAHB), builder confidence remains strong through March. As the spring buying season begins, builders are encouraged by a healthy market. Affordability is a still a concern, as is the labor shortage and a shortage of buildable lots, but lumber prices have decreased and the economy continues to do well. You can read the complete press release below.

Builder Confidence Holds Steady in March

(NAHB), 

Builder confidence in the market for newly-built single-family homes held steady at 62 in March, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.

“Builders report the market is stabilizing following the slowdown at the end of 2018 and they anticipate a solid spring home buying season,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

“In a healthy sign for the housing market, more builders are saying that lower price points are selling well, and this was reflected in the government’s new home sales report released last week,” said NAHB Chief Economist Robert Dietz. “Increased inventory of affordably priced homes – in markets where government policies support such construction - will enable more entry-level buyers to enter the market.”

However, affordability still remains a key concern for builders. The skilled worker shortage, lack of buildable lots and stiff zoning restrictions in many major metro markets are among the challenges builders face as they strive to construct homes that can sell at affordable price points.

Derived from a monthly survey that NAHB has been conducting for 30 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 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 component charting sales expectations in the next six months rose three points to 71, the index gauging current sales conditions increased two points to 68, and the component measuring traffic of prospective buyers fell four points to 44. Looking at the three-month moving averages for regional HMI scores, the Northeast posted a five-point gain to 48, the South was up three points to 66 and West increased two points to 69. The Midwest posted a one-point decline to 51.

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 at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

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