Number of 5,000+ Square Foot Homes Down in 2022

2023-09-28T10:23:23-05:00

According to the annual data from the Census Bureau’s Survey of Construction (SOC), a total of 29,000 5,000+ square-foot homes were started in 2022, down from 33,000 in 2021.  In the boom year of 2006, the number of new 5,000+ square foot homes reached a peak of 45,000.   In 2007, the number fell to 37,000.  In 2008, only 20,000 such homes were started, and from 2009 to 2012, the number remained well under 20,000 a year, but has been consistently above 20,000 since then. On a percentage basis, the share of new homes started with 5,000 square feet or more of living space was also down slightly, from 2.90% in 2021 to 2.85% in 2022.  In 2015, the 5,000+ square foot home share reached a peak of 3.92%.  Since then, the share has fluctuated in a band between 2.50% and 3.10%.  The 2022 decline in the share of 5,000+ square foot homes is consistent with the recent downward trend in median and average size of new single-family homes reported elsewhere. Tabulating the major characteristics of 5,000+ square foot homes started in 2022 shows that 80% have a porch, 70% have a finished basement, 68% have 4 bathrooms or more, 66% have a patio, 67% have a 3-or-more car garage, 56% belong to a community association and 54% have 5 bedrooms or more. Related ‹ Lot Values Trail Behind InflationTags: economics, eye on the economy, home building, housing economics, single-family, starts, survey of construction

Number of 5,000+ Square Foot Homes Down in 20222023-09-28T10:23:23-05:00

New Homes Same Size but Higher Priced if Age-Restricted

2023-09-25T08:17:51-05:00

Of the roughly 1,005,000 single-family and 547,000 multifamily homes started in 2022, 59,000 (28,000 single-family and 31,000 multifamily) were built in age-restricted communities, according to NAHB tabulation of data from the Survey of Construction (SOC, conducted by the U.S. Census Bureau and partially funded by HUD).  A residential community can be legally age-restricted, provided it conforms the one of the set of rules specified in the Housing for Older Persons Act  of 1995. NAHB was first successful in persuading HUD and the Census Bureau to collect and publish data on the age-restricted status of new homes in 2009, during the depths of the housing downturn.  In 2009, builders started only 17,000 homes in age-restricted communities  (9,000 single-family and 8,000 multifamily).  The numbers then increased steadily until reaching 60,000 age-restricted starts, roughly evenly split between single-family and multifamily) in 2018.  In 2022, the 28,000 age-restricted single-family starts were slightly off the peak of 33,000 reached a year earlier, and the 31,000 age-restricted multifamily starts tied the all-time high set in 2018.  Although we don’t yet have data on age-restricted starts for 2023, a recent post shows that starts in general have been running lower than they were a year earlier, due largely to the Federal Reserve’s policy of interest rate hikes to tame inflation. The SOC provides enough data to look at the characteristics of new age-restricted single-family homes to see if they differ from other single-family homes started in 2022.  This exercise shows that the age-restricted homes tend to be about the same size as others, but on somewhat smaller lots and higher-priced.  The median size of an age-restricted home was exactly the same as the median for other single-family homes in 2022: 2,300 square feet.  As usual, however, the median lot size for age-restricted homes, was somewhat smaller—just under one-sixth of an acre vs. one-fifth for homes started outside of age-restricted communities.  There has been a general trend toward smaller lot sizes, as described in a September 8 post.  Another trend that has continued is the one toward higher house prices.  The median price of a new, age-restricted single family home started in 2022 and built for sale was $472,000—$75,000 higher than it was a year earlier and considerably above the $461,000 median price of non-age-restricted homes started in 2022. Other questions in the SOC show that new single-family homes are more likely to be attached (i.e., townhomes), and single story with no basement if the homes are age-restricted.  The age-restricted homes are also more likely to come with patios, but less likely to have decks.  Finally, age-restricted homes are less likely to require a loan and more likely to be purchased for cash, as home buyers who are older have had more of a chance to accumulate the savings and assets (often equity in a previous home) that can be converted to cash. Related ‹ Employment Situation in August: State-Level AnalysisTags: 55+ housing, age restricted, economics, home building, housing, SOC, survey of construction

New Homes Same Size but Higher Priced if Age-Restricted2023-09-25T08:17:51-05:00

Market Share for Modular and Other Non-Site Built Housing in 2022

2023-09-22T08:38:28-05:00

The total market share of non-site built single-family homes (modular and panelized) was just 2% of single-family homes in 2022, according to completion data from the Census Bureau Survey of Construction data and NAHB analysis. This share has been steadily declining since the early-2000s despite the high-level of interest for non-site built construction. This low market share in fact runs counter to some media commentary on off-site construction, which nonetheless holds potential for market share gains in the years ahead. In 2022, there were 26,000 total single-family units built using modular (12,000) and panelized/pre-cut (14,000) construction methods, out of a total of 1.02 million single-family homes completed. While the market share is small, there exists potential for expansion. This 2% market share for 2022 represents a decline from years prior to the Great Recession. In 1998, 7% of single-family completions were modular (4%) or panelized (3%). This marked the largest share for the 1992-2022 period. One notable regional concentration is found in the Northeast and Midwest. In the Northeast, 7% (3,000 homes) of the region’s 60,000 housing units were completed using non-site build construction methods, the highest share in the country. In the Midwest, 6% (7,000 homes) of the region’s 137,000 housing units were completed using non-site build construction methods. With respect to multifamily construction, approximately 2% of multifamily buildings (properties, not units) were built using panelized methods. Similar to single-family construction, this market share was expected to grow, but the expected gains did not materialize due to various constraints in the industry. In the year 2000 and 2011, 5% of multifamily buildings were constructed with modular (1%) or panelized construction methods (4%). Related ‹ Existing Home Sales Hit 7-Month Low as Prices Keep RisingTags: economics, home building, housing, modular, multifamily, panelized, single-family, SOC, systems built

Market Share for Modular and Other Non-Site Built Housing in 20222023-09-22T08:38:28-05:00

Single-Family Permits Decline in July 2023

2023-09-15T09:16:54-05:00

Over the first seven months of 2023, the total number of single-family permits issued year-to-date (YTD) nationwide reached 527,158. On a year-over-year (YoY) basis, this is 18.4% below the July 2022 level of 645,877. Year-to-date ending in July, single-family permits declined in all four regions. The Northeast posted the lowest decline of 12.1%, while the West region reported the steepest decline of 25.1%. The South declined by 16.5% and the Midwest declined by 18.0% in single-family permits during this time. For multifamily permits, the South region posted a modest decline of 7.5% while the West declined by 14.1%, the Midwest declined by 20.8%, and the Northeast declined by 31.2%. Between July 2022 YTD and July 2023 YTD, except for Hawaii (+16.1%), all the other states and the District of Columbia reported declines in single-family permits. The range of declines spanned 1.5% in Maryland to 49.3% in Alaska. The ten states issuing the highest number of single-family permits combined accounted for 63.9% of the total single-family permits issued. Texas, the state with the highest number of single-family permits issued, declined 20.3% in the past 12 months while the next two highest states, Florida and North Carolina declined by 18.8% and 10.3% respectively. Year-to-date, ending in July, the total number of multifamily permits issued nationwide reached 337,730. This is 14.3% below the July 2022 level of 394,215. Between July 2022 YTD and July 2023 YTD, 16 states recorded growth, while 34 states and the District of Columbia recorded a decline in multifamily permits. Rhode Island (+150.0%) led the way with a sharp rise in multifamily permits from 126 to 315 while Wyoming had the largest decline of 63.6% from 302 to 110. The ten states issuing the highest number of multifamily permits combined accounted for 64.8% of the multifamily permits issued. Texas, the state with the highest number of multifamily permits issued, declined 19.3% in the past 12 months while the next two highest states, Florida declined by 2.9% and California increased by 4.5%. At the local level, below are the top ten metro areas that issued the highest number of single-family permits. Top 10 Largest SF Markets July-23 (# of units YTD, NSA) YTD % Change(compared to July-22) Houston-The Woodlands-Sugar Land, TX                                         29,687 -8% Dallas-Fort Worth-Arlington, TX                                         24,088 -19% Atlanta-Sandy Springs-Roswell, GA                                         14,417 -14% Phoenix-Mesa-Scottsdale, AZ                                         13,302 -33% Charlotte-Concord-Gastonia, NC-SC                                         11,174 -13% Orlando-Kissimmee-Sanford, FL                                         10,020 -9% Austin-Round Rock, TX                                           9,202 -39% Nashville-Davidson–Murfreesboro–Franklin, TN                                           8,669 -17% Tampa-St. Petersburg-Clearwater, FL                                           8,050 -22% Raleigh, NC                                           7,639 -10% For multifamily permits, below are the top ten local areas that issued the highest number of permits.  Top 10 Largest MF Markets July-23 (# of units YTD, NSA) YTD % Change(compared to July-22) New York-Newark-Jersey City, NY-NJ-PA                                         17,802 -43% Dallas-Fort Worth-Arlington, TX                                         15,567 -23% Houston-The Woodlands-Sugar Land, TX                                         11,897 -22% Phoenix-Mesa-Scottsdale, AZ                                         11,608 7% Los Angeles-Long Beach-Anaheim, CA                                         10,925 -5% Austin-Round Rock, TX                                         10,895 -32% Miami-Fort Lauderdale-West Palm Beach, FL                                         10,266 25% Atlanta-Sandy Springs-Roswell, GA                                         10,000 0% Washington-Arlington-Alexandria, DC-VA-MD-WV                                           7,347 -27% Denver-Aurora-Lakewood, CO                                           7,148 -16% Related ‹ Building Materials Prices Remain Stable but Diesel Skyrockets 40% in AugustTags: home building, multifamily, single-family, state and local markets, state permits

Single-Family Permits Decline in July 20232023-09-15T09:16:54-05:00

Share of Non-Conventional Financing Holds Steady in 2022

2023-09-06T09:22:17-05:00

NAHB analysis of the 2022 Census Bureau Survey of Construction (SOC) data shows that, nationwide, the share of non-conventional financing for new home sales accounted for 28.1% of the market, roughly the same as in 2021, at 28.8%. As in previous years, conventional financing dominated the market at 71.9% of sales. In 2020, the share of non-conventional financing was 34.4% of the market while conventional financing accounted for 65.6% of the market share. Non-conventional forms of financing, as opposed to conventional mortgage loans, include loans insured by the Federal Housing Administration (FHA), VA-backed loans, cash purchases and other types of financing such as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds. The reliance on non-conventional forms of financing varied across the United States, with its share at 34.0% in West South Central but accounting for only 14.9% of new single-family home starts in the Middle Atlantic division. Nationwide, cash purchases were the majority share of non-conventional financing of new home purchases, accounting for 13% of the market share up from 11% in 2021. FHA-backed loans accounted for 8% which is lower than in 2021, where it was 11% of the market share. The share of VA-backed loans was at 4% market share in 2021 while Other Financing was 3% of market share. Cash financing dominated non-conventional forms of financing in East South Central, where 24.2% of all homes started were purchased with cash. Except for West South Central, cash purchases led non-conventional financing all other census regions. Cash purchases accounted for 23.3% in New England, 10.1% in Middle Atlantic, 17.6% in East North Central, 12.6% in West North Central, 12.1% in South Atlantic, 10.3% in Mountain, and 9.7% in Pacific. FHA-backed loans accounted for the majority of all non-conventional financing in the West South Central division accounting for 12.9% of the homes started. New England division reported the lowest FHA-backed loans with none of the homes started in 2022 were purchased with FHA-backed loans. VA-backed loans were most used in the Mountain division, which accounted for 6.7% of non-conventional forms of financing. In New England, VA-backed loans were only 0.3%, the lowest market share for this category. Other financing such as the Rural Housing Service, Habitat for Humanity, loans from individuals, state or local government mortgage-backed bonds was highest in West South Central where it was 6.3% of market share, while Middle Atlantic division reported the lowest share at 0.6%. Related ‹ Large Metro Markets Show Biggest Slowdown in Single-Family ConstructionTags: conventional loans, FHA, new home cash purchases, nonconventional loans, SOC, VA loans

Share of Non-Conventional Financing Holds Steady in 20222023-09-06T09:22:17-05:00

Unemployment Rises To 3.8% in August

2023-09-01T10:19:26-05:00

The recent employment data indicates that the labor market is cooling gradually due to rising interest rates. Total employment increased by 187,000 and the unemployment rate rose to 3.8% from 3.5%. Wage growth slowed. In August, wages grew at a 4.3% year-over-year growth rate, down 1.1 percentage points from a 5.4% gain in August 2022. The Bureau of Labor Statistics (BLS) announced the preliminary estimate of the annual benchmark revision, indicating March 2023 total nonfarm employment was revised down by 306,000 jobs, a 0.2% decrease from the previous release. Construction was revised up by 30,000 jobs, and manufacturing revised down by 43,000 jobs. The final revision will be issued in February 2024 with the publication of the January 2024 Employment Situation news release. Total nonfarm payroll employment increased by 187,000 in August, following a gain of 157,000 in July, as reported in the Employment Situation Summary. The estimates for the previous two months were revised down. The estimate for June was revised lower by 80,000 from +185,000 to +105,000, while the July increase was revised down by 30,000, from +187,000 to +157,000. Despite restrictive monetary policy, nearly 5.4 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In the first eight months of 2023, nearly 1.9 million jobs were created, and monthly employment growth averaged 236,000 per month, following the average monthly growth of 399,000 in 2022. The unemployment rate rose by 0.3 percentage points to 3.8% in August. The number of unemployed persons increased by 514,000 to nearly 6.4 million, while the number of employed persons increased by 222,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already holding a job, rose 0.2 percentage points to 62.8%. Moreover, the labor force participation rate for people who aged between 25 and 54 edged up 0.1 percentage point to 83.5%. While the overall labor force participation rate is still below its pre-pandemic levels at the beginning of 2020, the rate for people who aged between 25 and 54 exceeds the pre-pandemic level of 83.1%. For industry sectors, employment in health care (+71,000), leisure and hospitality (+40,000), social assistance (+26,000), and construction (+22,000) continued to trend up in August, while transportation and warehousing lost 34,000 jobs. Employment in the overall construction sector increased by 22,000 in August, following a 16,000 gain in July. While residential construction added 1,400 jobs, non-residential construction employment gained 21,000 jobs. Residential construction employment now stands at 3.3 million in August, broken down as 925,000 builders and 2.4 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction was 3,500 a month. Over the last 12 months, home builders and remodelers added 42,400 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 1,293,500 positions. In August, the unemployment rate for construction workers rose by 0.4 percentage points to 4.9% on a seasonally adjusted basis. The unemployment rate for construction workers remained at a relatively lower level, after reaching 14.2% in April 2020, due to the housing demand impact of the COVID-19 pandemic. Related ‹ 2022 Single-Family Starts by Census DivisionTags: employment, labor force, labor force participation rate, residential construction employment, wage

Unemployment Rises To 3.8% in August2023-09-01T10:19:26-05:00

2022 Single-Family Starts by Census Division

2023-08-30T11:19:07-05:00

By Jing Fu on August 30, 2023 • According to NAHB analysis of the Survey of Construction (SOC), new single-family starts decreased in 2022. Nationally, 1,018,495 new single-family units started construction in 2022, 10% fewer than the number of units started in 2021. It marked the first decrease since 2011 but was still the second highest count since the Great Recession. Among all nine Census divisions, the South Atlantic, West South Central and Mountain Divisions led the way with the most new single-family units started in 2022. These three divisions represent 20 states and Washington, D.C., approximately 41% of United States, while the number of new single-family housing starts in these three divisions accounted for almost two thirds of the total new single-family housing starts. In addition, single-family units started in the Pacific Division decreased to 94,158 in 2022, compared to 106,240 new single-family starts in 2021. There were 85,569 new single-family units started in the East North Central Division in 2022. While the Pacific Division accounted for 9% of the total new single-family housing starts, the East North Central Division accounted for 8%. The other four divisions, including East South Central, West North Central, Middle Atlantic and New England, accounted for the remaining 17% of the total new single-family housing starts. In 2022, eight out of the nine divisions had negative growth rate. The East South Central Division was the only division that had positive annual growth rate. The Mountain Division reported the largest drop among the nine divisions, followed by the West South Central Division with a 12% decrease and the West North Central Division with a 12% decrease as well. Compared to last year, none of the nine divisions had an acceleration in 2022. Related ‹ Home Price Appreciation Continues in JuneTags: annual growth rate, housing starts, nine divisions, single-family

2022 Single-Family Starts by Census Division2023-08-30T11:19:07-05:00

Home Price Appreciation Continues in June

2023-08-29T12:17:55-05:00

By Jing Fu on August 29, 2023 • In June, national home prices continued to increase. Limited inventory and solid but weakened demand put upward pressure on home prices, despite rising mortgage rates. Locally, all 20 metro areas, reported by S&P Dow Jones Indices, had positive home price appreciation in June. The S&P CoreLogic Case-Shiller U.S. National Home Price Index, reported by S&P Dow Jones Indices, rose at a seasonally adjusted annual growth rate of 8.1% in June, slightly slower than a 10.2% increase in May. After seven consecutive months of decline, home prices have increased for five consecutive months since February 2023. National home prices are now 65% higher than their last peak during the housing boom in March 2006. On a year-over-year basis, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index posted a 0.0% annual gain in June, following a 0.4% decrease in May and a 0.1% decrease in April. Meanwhile, the Home Price Index, released by the Federal Housing Finance Agency (FHFA), rose at a seasonally adjusted annual rate of 4.2% in June, following a 9.2% increase in May. On a year-over-year basis, the FHFA Home Price NSA Index rose by 3.2% in June, up from 3.0% in the previous month. In addition to tracking national home price changes, S&P Dow Jones Indices reported home price indexes across 20 metro areas in June. In June, all 20 metro areas reported positive annual growth rates ranged from 3.6% to 18.9%. Among the 20 metro areas, 11 metro areas exceeded the national average of 8.1%. San Diego, Seattle, and New York had the highest home price appreciation in June. San Diego led the way with an 18.9% increase, followed by Seattle with an 18.2% increase and New York with a 16.4% increase. Related ‹ Job Openings Data Reveal Labor Market CoolingTags: FHFA Home Price Index, home prices, S&P CoreLogic Case-Shiller Home Price Index

Home Price Appreciation Continues in June2023-08-29T12:17:55-05:00

Wood-Framed Home Share Increased for Three Straight Years

2023-08-28T08:22:15-05:00

By Jing Fu on August 28, 2023 • Wood framing remains the most dominant construction method for single-family homes in the U.S., according to NAHB analysis of 2022 Census Bureau data. For 2022 completions, 94% of new homes were wood-framed, another 6% were concrete-framed homes, and less than half a percent was steel-framed. On a count basis, there were 956,000 wood-framed homes completed in 2022. This was a 7% gain over the 2021 total. The wood-framed market share has increased for the past three years, from 90% in 2019 to 94% in 2022. As noted above, steel-framed homes are relatively uncommon, with a total of 3,000 housing completions in 2022, the same amount as the 2021 completions. Concrete-framed homes experienced the third straight decline in 2022. After a 5% decrease in 2021 and a 13% decrease in 2020, the total number of concrete-framed homes decreased 11% from 71,000 completions in 2021 to 63,000 in 2022. Meanwhile, the concrete-framed market share decreased from 10% in 2019 to 6% in 2022. Non-wood based framing methods are primarily concentrated in the South due to residential resiliency requirements. In 2022, concrete-framed homes made up 10% of all homes completed in the South. Approximately two-thirds of steel framed homes completed in 2022 were in the South, with another one-third in the West. Related ‹ AD&C Loans: Rising Rate & Tightening Trends ContinueTags: concrete-framed homes, framing method, single-family construction, SOC, steel-framed homes, wood-framed homes

Wood-Framed Home Share Increased for Three Straight Years2023-08-28T08:22:15-05:00

AD&C Loans: Rising Rate & Tightening Trends Continue

2023-08-25T07:37:24-05:00

Interest rates on loans for Acquisition, Development & Construction (AD&C) continued to climb in the second quarter of 2023, according to NAHB’s quarterly Survey on AD&C Financing.  Quarter-over-quarter, the contract interest rate increased on all four categories of loans tracked in the AD&C Survey: from 8.50% to 8.62% on loans for land acquisition, from 8.19% to 8.70% on loans for land development, from 8.10% to 8.37% on loans for speculative single-family construction, and from 7.61% to 8.18% on loans for pre-sold single-family construction.  In all four cases, the contract interest rate was higher in 2023 Q2 than it had been at any time since NAHB began collecting the data in 2018.  The rates have been climbing steadily every quarter since the start of 2022 with one minor exception (for land acquisition loans in the third quarter of 2022). Meanwhile, the average initial points charged on the loans actually declined in the second quarter: from 0.81% to 0.52% on land development loans, from 0.85% to 0.81% on land acquisition loans, from 0.79% to 0.71% for speculative single-family construction, and from 0.53% to 0.44% on loans for pre-sold single-family construction. Only in the case of land acquisition, however, was the decline in initial points large enough to offset the contract interest rate and reduce the average effective rate (the rate of return to the lender over the assumed life of the loan, taking both the contract interest rate and initial points into account) paid by developers: from 11.09% in the first quarter to 10.87%.  On the other three categories of AD&C loans, the average effective rate continued to climb, much as it had over the previous year: from 11.88% to 12.67% on loans for land development, from 12.59% to 12.85% on loans for speculative single-family construction, and from 12.01% to 12.67% on loans for pre-sold single-family construction. The NAHB AD&C financing survey also collects data on credit availability.  To help interpret these data, NAHB generates a net easing index, similar to the net easing index based on the Federal Reserve’s survey of senior loan officers.  Plotting the two indices on a single graph lets viewers compare what both the borrowers and lenders are saying about current credit conditions. In the second quarter of 2023, both the NAHB and Fed indices were slightly less negative than they had been in the first quarter, but still solidly in negative territory, indicating net tightening of credit. The NAHB net easing index posted a reading of -35.3, compared to -36.0 in the first quarter.  And the Fed net easing index posted a reading of -71.7, compared to -73.3 in the first quarter.  This marks the sixth consecutive quarter during which both borrowers and lenders have been reporting tightening credit conditions. More detail on current credit conditions for builders and developers is available on NAHB’s AD&C Financing web page. Related ‹ Home Improvement Loan Applications in 2021: A State- and County-Level AnalysisTags: ad&c lending, ad&c loans, ADC, construciton loans, construction lending, credit conditions, economics, home building, housing, interest rates, lending

AD&C Loans: Rising Rate & Tightening Trends Continue2023-08-25T07:37:24-05:00
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