Builders’ Top Challenges for 2024

2024-01-24T12:17:19-06:00

According to the January 2024 survey for the NAHB/Wells Fargo Housing Market Index, high interest rates were a significant issue for 90% of builders in 2023, and 77% expect them to be a problem in 2024. The second most widespread problem in 2023 was rising inflation in US Economy, cited by 83% of builders, with 52% expecting it to be a problem in 2024. The cost and availability of labor was a significant problem to only 13% of builders in 2011. That share has increased significantly over the years, peaking at 87% in 2019.  Due to the pandemic, fewer builders reported this problem in 2020 (65%), but the share rose again in 2021 (82%) and 2022 (85%).  Not surprisingly, given the increase in construction job openings, the share eased slightly in 2023 to 74%.  A similar 75% expect the cost and availability of labor to remain a significant issue in 2024.In 2011, building materials prices was a significant problem to 33% of builders.  The share has fluctuated over the years, from a low of 42% in 2015 to a peak of 96% in 2020, 2021, and 2022.  The slowdown in single-family construction in 2023 made this less of a problem for builders last year, as ‘only’ 63% reported it as a significant issue.  Fewer expect it to face it in 2024 (58%). Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2024. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 71% of builders in 2023, with 77% expecting it to be an issue in 2024.  Negative media reports making buyers cautious was reported as a significant issue by 56% of builders in 2023, and 54% expect this problem in 2024. Concern about employment/economic situation was another buyer issue for 48% of builders in 2023, but 55% anticipate this issue in 2024. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 42% of builders in 2023, but a larger 54% expect it to be a problem in 2024.  Less than 30% of builders experienced problems in 2023 with buyers being unable to sell existing homes, potential buyers putting off purchase due to student debt, and competition from distressed sales/foreclosures. For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full survey report. ‹ Employment Situation in December: State-Level AnalysisTags: builders, Building Materials, construction, hmi, home building, housing trends report, inflation, interest rates, labor, single-family

Builders’ Top Challenges for 20242024-01-24T12:17:19-06:00

Share of Homes Built in Community Associations Edges Down Again

2023-12-07T10:21:12-06:00

By Ashok Chaluvadi on December 7, 2023 • According to data from the Census Bureau’s Survey of Construction (SOC), 62.6% of single-family homes started in 2022 were built within a community or homeowner’s association.  This marks the second year in a row that the share declined, from the high point of 67.1% posted in 2020, and 65.5% in 2021.  Prior to 2021 the share had been on a decade-long upward trend.  In absolute numbers, a total of 623,096 homes were started in community associations in 2022, compared to 729,109 in 2021. The Census Bureau defines community or homeowner’s associations as “formal legal entities created to maintain common areas of a development and to enforce private deed restrictions; these organizations are usually created when the development is built, and membership is mandatory.” When analyzed by the 9 census divisions, the highest share was in the Mountain Division, where 78.6% of new homes were in such communities. In the New England Division, on the other hand, the share was only 34.5%. In the South Atlantic Division 71.4% of new homes started in 2022 had a community or home owner’s association, followed by the West South-Central Division at 68.6%, and the Pacific 52.4%. In the West North-Central Division, the share was 46.7%, while in the East North-Central Divisions it was 44.3%. In the East South-Central and Middle Atlantic Division 42.3% and 34.8% of new homes started in 2022 were within a community or home owner’s association, respectively. ‹ Two-Story Foyer Trend Sees a Slight Increase in 2022Tags: construction, economics, home building, housing economics, single-family, starts, survey of construction

Share of Homes Built in Community Associations Edges Down Again2023-12-07T10:21:12-06:00

Custom Home Building Share Improves in 2022

2023-11-30T10:19:31-06:00

By Ashok Chaluvadi on November 30, 2023 • According to data from the Census Bureau’s Survey of Construction (SOC), custom homes share increased to 20.4 percent of all single-family homes started in 2022 from the 17.6 percent recorded in 2021. The custom home market consists of contractor-built and owner-built houses—homes built one at a time for owner occupancy on the owner’s land, with either the owner or a builder acting as a general contractor. The alternatives are homes built for sale (on the builder’s land, often in subdivisions, with the intention of selling the house and land in one transaction) and homes built for rent. In 2022, 71.4 percent of the single-family homes started were built for sale, and 5.9 percent were built for rent. While the custom-home percentage increased in 2022, the number of custom homes started in 2022 (207,472) was actually higher than the number of custom homes started in 2021 (199,675). The quarterly published statistics show that the custom-home share of single-family starts declined. Although the quarterly statistics are more timely, they lack the geographic detail available in the annual data set. When analyzed by the 9 census divisions, the annual data show that the highest custom home share in 2022 was 45.4 percent in New England Division. In the South Atlantic Division, on the other hand, the share was only 13.8 percent. In the East South-Central Division, 39.6 percent of new homes started were contractor-built or owner-built houses, followed by the East North-Central Division at 37.9 percent and 34.6 percent in the Middle Atlantic Division. In the West North Central Division 23.4 percent of new homes started where custom homes, followed by 15.6 percent in the West South-Central Division, 18.0 percent in the Pacific Division, and 15.5 percent in the Mountain Division. ‹ Unraveling the Complex Tapestry of Inflation Dynamics: Post-Covid ChangesTags: construction, economics, eye on the economy, Federal Reserve, home building, housing economics, single-family, starts

Custom Home Building Share Improves in 20222023-11-30T10:19:31-06:00

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