Builder Confidence Slips Two Points as Lumber Prices Soar

Builder confidence in the market for newly-built single-family homes fell two points to 68 in June on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The decline was due in large part to sharply elevated lumber prices, although sentiment remains on solid footing.

“Builders are optimistic about housing market conditions as consumer demand continues to grow,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.”

“Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead,” said NAHB Chief Economist Robert Dietz. “However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed.”

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 three HMI indexes inched down a single point in June. The index measuring current sales conditions fell to 75, the component gauging expectations in the next six months dropped to 76, and the metric charting buyer traffic edged down to 50.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 57 while the West and Midwest remained unchanged at 76 and 65, respectively. The South fell one point to 71.

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.

Original Source

Statement from NAHB Chairman Randy Noel on EPA Sending Revised WOTUS Rule to OMB

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., issued the following statement after the Environmental Protection Agency (EPA) announced that a revised Waters of the U.S. rule has been sent to the Office of Management and Budget (OMB).

“We are encouraged that the EPA and U.S. Army Corps of Engineers have taken an important step forward to redefine the “Waters of the U.S.” (WOTUS) rule by sending a proposed definition to the OMB for final review prior to proposing the rule in the Federal Register for public comment.

“NAHB looks forward to working with the Trump administration, industry stakeholders, states, and local governments to ensure the EPA and Corps proposal is consistent with Supreme Court precedents concerning the limits of federal jurisdiction over isolated wetlands and ephemeral streams as well as President Trump’s executive order on WOTUS.

“The nation’s home builders expect the forthcoming proposed WOTUS rule will protect our nation’s waterways and promote economic growth my minimizing federal regulatory burdens.”

Original Source

Statement from NAHB Chairman Randy Noel on Congressional Lumber Letter

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., today issued the following statement on a congressional letter signed by 171 members of Congress urging the Trump administration to restart lumber trade talks with Canada:

“More than 170 lawmakers sent a letter on Tuesday to the Trump administration that calls on the U.S. to resume talks with Canada to negotiate a new softwood lumber trade agreement. NAHB applauds these members of Congress from both sides of the political aisle for taking a stand for homeownership. The current situation is clearly unacceptable. Tariffs averaging more than 20 percent on Canadian softwood lumber shipments into the U.S. are contributing to rising market volatility and record-high lumber prices that are making it harder for millions of Americans to afford a home.

“It’s important to note that the congressional letter does not take sides in this trade dispute. It simply highlights the urgent need for the U.S. and Canada to renew negotiations in an effort to come to an equitable solution that will satisfy all sides — including domestic industries and consumers — that rely on softwood lumber for their economic well-being.”

Original Source

More than 30 Percent of Multifamily Development Cost Attributable to Regulation, According to New Study

Regulation imposed by all levels of government accounts for an average of 32.1 percent of multifamily development costs, according to new research released today by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC). In fact, in a quarter of cases, that number can reach as high as 42.6 percent.

Apartment and condo development can be subject to a significant array of regulatory costs, including a broad range of fees, standards and other requirements imposed at different stages of the development and construction process. However, until now there had been no previous research done to analyze the extent of this regulation. This joint research effort surveyed NAHB and NMHC members to quantify how much regulation exists and how much it is adding to the cost of developing new multifamily properties.

Breaking down the government regulation costs showed that an average of 7 percent of regulatory costs come from building code changes over the past 10 years, 5.9 percent is attributable to development requirements (such as streets, sidewalks, parking, landscaping, and architectural design) that go beyond what the developer would ordinarily provide, and 4.2 percent of the costs come from non-refundable fees charged when site work begins.

“The home building industry is one of the most highly regulated industries, and the multifamily sector is particularly subject to these obligations,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Housing affordability is a huge issue throughout the county, and this new research only further illustrates how the layers of excessive regulation translate into higher rents and reduced affordability for consumers.”

“The current regulatory framework has limited the amount of housing that can be built and increased the cost of what is produced,” said NMHC President Doug Bibby. “At a time when states and localities are struggling to address housing affordability challenges, public and private stakeholders should work together to streamline regulations and take the steps necessary to expand housing in communities across the country.”

Although local governments generally have authority for approving development and adopting building codes, state and federal governments are increasingly becoming involved in the process and layering on additional levels of fees and regulations.

Developers can almost certainly expect average costs to be higher now or in the near future due to the effect of recent regulations that went in place at the end of 2017, such as the new Silica Rule. Further, the survey does not account for other price-influencing factors such as the effects of recent tariffs on building materials, or the extent to which local jurisdictions empower citizens to oppose multifamily development in their communities.

The full study can be viewed at: http://www.nahb.org/mfcostofregulation.

Original Source

Statement from NAHB Chairman Randy Noel on Democratic Housing Task Force

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., today issued the following statement on a report by the New Democrat Coalition Housing Task Force:

“NAHB commends the work of the New Democrat Coalition Housing Task Force to seek solutions to the nation’s housing affordability and shortage woes. Housing construction creates jobs, contributes to the tax base and is important for a strong and healthy economy. We look forward to working with Democratic and Republican leaders on Capitol Hill to find solutions that will help builders to construct sorely needed affordable housing units for hard-working American families.”

Original Source

NAHB Releases Salary, Bonus and Benefit Data for 39 Jobs Across the Home Building Industry

BuilderBooks, the publishing arm of the National Association of Home Builders (NAHB) recently released The Single-Family Builder Compensation Study, 2017 Edition. The study includes data collected on compensation and benefits for 39 common positions at single-family home building companies.

Results from this survey provide single-family builders with current information that can be used to benchmark their employees’ level of compensation and benefits. The data was analyzed by region of the country, 2017 expected dollar volume, number of expected starts in 2017 and number of employees on payroll.

The findings are presented from two different perspectives: Across all 39 positions, giving a broad view of the full-time positions that currently exist at single-family building companies, as well as a comparison of average total compensation and benefits across positions; and also as a detailed view of each position’s average compensation and benefits.

“This publication offers valuable information to any home building company,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “It gives readers an inside look into the compensation and benefits offered at similarly sized companies, and allows them to compare themselves to the average, or even to use these numbers as recruiting tools to showcase earning potential for prospective employees.”

The Single-Family Builder Compensation Study, 2017 Edition is available for purchase ($149.95 Retail/$79.95 NAHB Member, ISBN978-086718-766-3) at BuilderBooks.com or by calling 800-223-2665. The ebook is available at ebooks.builderbooks.com ($89.99 Retail/$55.99 for NAHB Members).

[Editor’s Note: Editors who are interested in receiving a complimentary copy of The Single-Family Builder Compensation Study, 2017 Edition to review for their publications should contact Patricia Potts at 202-266-8224 or [email protected].]

Original Source

Homeownership Is Primary Driver of U.S. Household Wealth

As the nation’s home builders celebrate National Homeownership Month in June, new research shows a household’s primary residence is its largest asset and continues to provide an important building block for long-term financial security.

The latest edition of the Survey of Consumer Finances, published by the Board of Governors of the Federal Reserve System, reports that the primary residence accounts for about one-quarter of all assets held by households in 2016, ahead of other financial assets, business interests and retirement accounts.

“Homeownership is a primary source of net worth for many Americans, and is an important step in accumulating personal financial assets over the long term,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La.

Building equity and accruing wealth when the value of your home appreciates are among the longer-term financial benefits of homeownership. Americans had a record-high $14.4 trillion of equity in their homes in the fourth quarter of 2017.

The national homeownership rate of 64.2 percent shows signs of sustained growth after bottoming out to a cycle low of 62.9 percent in the second quarter 2016. Yet, this number is still down from the peak of 69.2 percent in 2004, and remains below the 25-year average rate of 66.3 percent.

“We must continue to address the obstacles that remain for many potential home buyers, including factors that increase the cost to build new homes. Skyrocketing costs for lumber is the number one challenge for builders right now,” Noel said.

Since January 2017, rising lumber costs have increased the price of an average single-family home by nearly $9,000 and the market value of an average new multifamily housing unit by over $3,000. While there are many reasons for increasing lumber costs, the primary factor is the 20% effective tariff rate placed on Canadian softwood lumber.

NAHB has been fighting back against the rising prices by urging the president to resume talks with Canada to find a long-term solution to this trade dispute.

“These tariffs are making housing less affordable for American families,” Noel said. “NAHB will continue working on all fronts to find solutions that will ensure a lasting and stable supply of lumber imports into the U.S. at a competitive price.”

Original Source

NAR Position on AMC Appraisals

NAR Real Property Valuation Committee Chair Rebecca Jones and Vice Chair David Griffith talk about NAR’s appraiser independence policy and a paper published by the Federal Housing Finance Agency in May on appraisal management companies and appraisals they order.

Original Source

Statement from NAHB Chairman Randy Noel on Signing Banking Bill into Law

Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., issued the following statement after President Trump signed the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155) into law.

“NAHB commends President Trump for working with the House and Senate to advance bipartisan banking reform legislation through Congress. S. 2155 will improve credit availability by providing much-needed relief for community banks, which are the most common source of lending for home construction and are key providers of home mortgage loans. In turn, this will support a stronger, more robust recovery of the housing and mortgage markets.”

Original Source

Multifamily Builders and Developers Remain Positive about the Apartment and Condo Market as Demand Continues

Confidence in the multifamily housing market remained positive in the first quarter of 2018, according to the Multifamily Production Index (MPI) and the Multifamily Vacancy Index (MVI) released today by the National Association of Home Builders (NAHB). The MPI remained unchanged from last quarter, coming in at a reading of 53, while the MVI remained essentially unchanged at 42.

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 and all of its components are scaled so that a number above 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI is a weighted average of three key elements of the multifamily housing market: construction of low-rent units—apartments that are supported by low-income tax credits or other government subsidy programs; market-rate rental units—apartments that are built to be rented at the price the market will hold; and for-sale units—condominiums. The component measuring low-rent units edged down two points to 54, while the component measuring market rate rental units increased two points to 56 and the component measuring for-sale units remained even at 49.

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, remained essentially unchanged with an increase of one point to 42. The MVI is a weighted average of current occupancy indexes for class A, B, and C multifamily units, and can vary from 0 to 100, where any number over 50 indicates more property managers report more vacant apartments. A reading of 42 is seen as a healthy number for the multifamily market.

“Multifamily builders and developers are reporting solid demand around the country, as shown in the vacancy rate for the first quarter,” said Steve Lawson, president of The Lawson Companies in Virginia Beach, Va., and chairman of NAHB’s Multifamily Council. “We anticipate steady demand through the rest of the year as household formations continue to grow.”

“The stability of multifamily builder confidence is consistent with NAHB’s view that the market has reached a healthy, sustainable level of production,” said NAHB Chief Economist Robert Dietz. “The overall strong economy is supporting demand and balancing supply-side issues many builders are facing, including shortages of labor and buildable lots, and the recent surge in lumber prices.”

Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing information on likely movement in the Census figures one to three quarters in advance.

For data tables on the MPI and MVI, visit www.nahb.org/mms.

For more information on the NAHB Multifamily program, please visit NAHB Multifamily: https://www.nahb.org/en/members/committees-and-councils/councils/multifamily-council/nahb-multifamily.aspx.

Original Source