More Backing by FHA Loans for New Home Sales

 According to the National Association of Home Builders, the Quarterly Sales by Price and Financing report shows that FHA backed close to 14% of new home sales in the second quarter of 2023. Conventional loans went down to 73.7% of new home sales the same quarter while VA-backed sales were up to 5.4%. Cash purchases declined to 6.5% of new home sales. In fact, the share of cash purchases has decreased 2.9 percentage points over the past year and has ranged from 4.1% to 10.7% since Q2 2020.

Different regions within the US are backed by different financing sources. The national median sales price of a new home was $416,100. Split by types of financing, the median prices of new homes financed with conventional loans, FHA loans, VA loans and cash were $458,100, $346,500, 392,600 and 364,300, respectively. The price of a new home did decline in the past year. The biggest drop seen was a 20.1% decline.

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A Shift in Single-Family Market Share

 Overall we have seen across the county that single-family housing starts have slowed this year. In fact, the largest drop (percentage basis) has been seen in the larger populated areas. The hugest decrease was seen in the large metro-outlying counties which went from 23.6% in 2021 to -12.1% in 2022. Multi-family growth has been on the rise everywhere except highly densely populated areas according to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI).

We have seen changes since the pandemic in single-family marketing. A lot of people have been moving out of densely populated urban areas due to the pandemic. From the fourth quarter of 2019 to the fourth quarter of 2022, we saw a huge increase in Micro Counties from 6.0% to 7.4%. The biggest loss was in large metro-core counties which went from 18.4% to 16.0%.

Multi-family has remained in the positive and is above historical levels. In fact, six of the seven submarkets had growth above 15.0% during the last quarter of 2022. The smallest growth rate was seen in large metro-outlying counties which went to 35.7%. The trend is the same as single-family construction where even though it is still positive, there has been a drop since the fourth quarter of 2019. In fact, Large Metro-Core Counties went from 41.7% in 2019 to 36.7% in 2022.

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Private Residential Construction Spending Up

The NAHB analysis of Census Construction Spending reported a 1.1 increase in total private residential construction spending in December 2021. November 2021 also reported an increase of 0.7%, in fact, total private residential construction spending was 15% higher than reported at the same time last year. Spending was reported at a seasonally adjusted annual rate of $810.3 billion.

The growth rates are due to the solid growth of spending on single-family and multifamily construction. Monthly gains in single-family construction rose 2.1% to a $435 billion annual pace in December 2021. As for multifamily construction, there was a 0.4% increase in December 2021. Spending was a little down because of the supply chain issues and labor shortages.

Private nonresidential construction spending stayed steady during December 2021. The data shows that the spending was 9.1% higher than a year ago. As far as the separate spending in each category was $0.49 billion in office, $0.4 billion in amusement and recreation and $0.37 billion in lodging.

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Summer Saw an Increase in Private Residential Spending

The strong housing market and an uptick in the US economy are encouraging homeowners to spend money. According to NAHB analysis of Census Construction Spending, there was a 0.4% increase in the month of August in private residential construction spending. This took the seasonally adjusted annual rate to $786.6 billion. The data reported shows a 24.3% increase in total private residential construction spending over a year ago.

There was a dip in spending on single-family and multifamily improvements in July but it jumped back up 2.5% in August. This might have been due to such issues with building material supply chains and labor challenges. Material prices such as lumber are also skyrocketing.

The National Association of Home Builders construction spending index saw solid growth in single-family construction and home improvement. The data also reports a rebound in new multifamily construction spending. Private nonresidential construction spending was reported at a seasonally adjusted annual rate of $455.6 billion in August.

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These Days Spring Is Not the Only Optimal Time To Purchase a Home

 Typically spring and early summer are the best times for the real estate market. The past 15 months have changed the way the industry sees as the peak real estate season. Experts say that around Labor Day will be the best time to buy a home this year.

The market “will still be relatively competitive. But I think fall will be less competitive than spring and summer, than what we're experiencing in the housing market right now,” says Danielle Hale, Realtor.com’s chief economist.

According to the National Association of Realtors, now that pandemic restrictions are easing up, more sellers are willing to put their houses on the market. There is also an upward trend in home construction and there should be more housing inventory by this fall.

“There aren't as many other buyers out there looking. And at the same time, you still have some sellers that are hoping to close before the end of the year that are in the market,” Hale says.

Many experts say that the end of the year will be a great time for buyers. There are great deals out there in November and December.

“And if you're buying late in the year, you might even be able to pick up a house at a good price because the seller has already moved and doesn't want to carry an empty house,” says Joey Sheehan, a real estate agent and author in Bryn Mawr, Pennsylvania.

“Buyers who are not quite as serious tend to kind of fade out,” he says. “For buyers that are willing to keep their eye on the prize at that point in time of the year, I think there's a real opportunity to potentially find that home.”

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The New Year Began With Strong Single-Family Permit Gains

The National Association of Home Builders Eye On Housing reports that January 2021 was a month to celebrate in the housing industry. Single-family permit gains saw a year-over-year 19.2% increase from January 2020. In January 2020 the level was reported at 70,386 and in January 2021 the level reached 83,921 year-to-date YTD.

All four regions saw increases. The Midwest saw an increase of 21.5%, right behind the Northeast with a 20.7% increase, the South 20.3% and the West came in last with a 15.1% increase. Sources feel that the Midwest saw the biggest increase due to the area's more affordable housing.

Not all states saw a YTD increase from January 2020 to January 2021. The highest increase was in South Dakota going from 99 to 202 with a 104% increase. The biggest decline was seen in Montana from 171 in 2020 to 144 in 2021 making this a decline of 15.8%. The top 10 states with the highest numbers combined accounted for 64.1% of the total single-family permits issued.

Metropolitan Statistical Area Single-family Permits: Jan (Units #YTD, NSA)

 

Metropolitan Statistical Area	Single-family Permits: Jan (Units #YTD, NSA)
Dallas-Fort Worth-Arlington, TX	4,330
Houston-The Woodlands-Sugar Land, TX	4,258
Phoenix-Mesa-Scottsdale, AZ	2,656
Atlanta-Sandy Springs-Roswell, GA	2,622
Tampa-St. Petersburg-Clearwater, FL	1,954
Austin-Round Rock, TX	1,940
Charlotte-Concord-Gastonia, NC-SC	1,506
Washington-Arlington-Alexandria, DC-VA-MD-WV	1,335
Jacksonville, FL	1,275
Nashville-Davidson–Murfreesboro–Franklin, TN	1,208

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First-Time Home Buyers Make Up Most of the New Home Market

The February 2021 National Association of Home Builders/Wells Fargo Housing Market Index (HMI) reported that 43% of homebuyers in the new home market were first-time home buyers. Two-thirds of builders with single-family starts in 2020 said that 20% of their homes were sold to first-time buyers.

The report also revealed that 15% of new single-family home sales were second homes. A second home according to the report includes homes that are used as a vacation home or investment property. According to 65% of the builders of single-family starts in 2020, 5% of the homes were sold as second homes.

The NAHB/Wells Fargo Housing Market Index is derived from a survey that is monthly given to NAHB members. This survey is designed to take the pulse of the single-family housing market. These chosen members are asked to rate the housing market on a scale of "good", "fair" or "poor" and a scale of "high to very high", "average" or "low to very low". There are three separate parts of the measurements which are Present Single-Family Sales, Single-Family Sales for the Next Six Months, and Traffic of Prospective Buyers.

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Tips To Follow To Design a Better Home This Year

Homeowners are changing their view on a home’s purpose and design this year due to the COVID-19 pandemic. Not only do homeowners want more space but they also want to design a space that can be used for multiple purposes. The International Builders’ Show’s Education and Exhibitor Showcase had sessions that showcased how to design a better home.

1.60 Design Ideas in 60 Minutes

During the session, those that attend will be introduced to current design ideas and strategies. Those leading will include industry-leading architects, interior designers, developers and builders. The sessions will feature how you can use these ideas and strategies to update your elevations, renew floor plans, animate streetscapes, enhance amenities and develop dynamic neighborhoods.

2. Smaller Floor Plans that Don’t Feel Small: Great Floor Plans Under 2,500 SF

This year the industry is focusing on how to design homes on a smaller footprint that does not feel cramped.

“This is exactly what I had hoped for — inspiration and ideas,” an IBSx attendee stated.

3. Designing Homes & Communities Beyond the Pandemic

The pandemic has definitely changed the way we approach building homes. There is more of a holistic approach when it comes to a design in a home.

4. Home Trends, Buyer Preferences & Most Likely Features for 2021

The National Association of Home Builder’s current research identifies how new home construction has changed since 2000. Buyer preferences and perceptions have dramatically changed in 2021. The affordability and availability in the current housing market are hot.

5. The 2021 Kitchen: Floor Plans, Finishes & Design Details That Make a Kitchen Pop

This session includes a tour of the ideal 2021 kitchen. Award-winning design leaders will walk attendees through the new 2021 kitchen floor plans, finishes and design details.

6. Small Spaces, Big Impact: Bathrooms, Entryways, Storage & Other Jewel Box & Flex Space Buyers Want

Builders are using every nook and cranny now. In this session, interior designers and architects reveal design details, plan considerations, finishes and tech needs of many overlooked and underappreciated small spaces.

To learn more about exciting on-demand options for your 2021 home check out the IBSx exhibitor directory.

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Single-Family Permits Ring In the New Year Strong

 We might have had a rough 2020 with the COVID-19 pandemic and strict stay-at-home orders but the housing market showed no sign of slowing down. The National Association of Home Builders reported a great ending to 2020 for Single-Family Permits. According to the United States Census Building Permits Survey, a total of 977,863 single-family permits were issued year-to-date in the country in 2020. This is a 14.5% increase on a year-over-year basis from December 2019 which reported 854,158.

National Association of Home Builders

The chart shows the amounts for each region. The South had the strongest with a 16.9% increase, Midwest followed with a 13.1% increase, the Northwest had an 11.6% increase and the West showed a 10.5% increase for 2020. Muli-family numbers were all on the decline in all four regions. The worst was the Northeast with a -11.1% decline, followed by the South with a -9.2% decline, the West declined -8.2% and the Midwest -1.2%.

Vermont had the highest rate of growth in single-family permits from 882 in 2019 to 1,285 in 2020. This was a 45.7% increase YTD. Forty-five states all showed an increase while the District of Columbia and five states showed a decline. The top 10 states accounted for 61.5% of the total single-family permits issued in 2020.

At the local level, below are top 10 metro areas that issued the highest number of single-family permits.

Metropolitan Statistical Area	Single-family Permits: Dec (Units #YTD, NSA)
Houston-The Woodlands-Sugar Land, TX	48,208
Dallas-Fort Worth-Arlington, TX	43,884
Phoenix-Mesa-Scottsdale, AZ	31,724
Atlanta-Sandy Springs-Roswell, GA	28,057
Austin-Round Rock, TX	21,653
Charlotte-Concord-Gastonia, NC-SC	17,807
Tampa-St. Petersburg-Clearwater, FL	16,028
Orlando-Kissimmee-Sanford, FL	15,523
Nashville-Davidson-Murfreesboro-Franklin, TN	14,125
Washington-Arlington-Alexandria, DC-VA-MD-WV	13,594

For multifamily permits, below are the top 10 local areas that issued the highest number of permits:

Metropolitan Statistical Area	Multifamily Permits: Dec (Units #YTD, NSA)
New York-Newark-Jersey City, NY-NJ-PA	42,739
Houston-The Woodlands-Sugar Land, TX	20,207
Austin-Round Rock, TX	19,222
Los Angeles-Long Beach-Anaheim, CA	17,494
Dallas-Fort Worth-Arlington, TX	16,178
Phoenix-Mesa-Scottsdale, AZ	14,894
Seattle-Tacoma-Bellevue, WA	14,752
Miami-Fort Lauderdale-West Palm Beach, FL	14,034
Minneapolis-St. Paul-Bloomington, MN-WI	11,515
Nashville-Davidson–Murfreesboro–Franklin, TN	11,404

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Existing Home Inventory Hits An All-Time Low

Realtor.com's December Housing Report shows that existing home inventory hit an all-time low. Existing home inventory has been low for a while but has been hit even harder since the pandemic. The December Housing Report reveals that homes for sale hit below 700,000 for the first time. This is a drop of 39.6% year over year with 449,000 fewer existing homes for sale than December 2019.

Newly listed homes have bounced back a little from the 8.7% decrease in November. December reported newly listed homes only being down 0.8% year over year. The country is seeing different improvements across the board. The Western and Northeastern regions are having the strongest improvements while the Midwest and South are lagging behind. The largest dip seen in new listings were in Nashville at -19.9%, Memphis at -18.5% and Charlotte at -16%.

As far as home prices, they continue on an upward trend into 2021. The report shows that the median listing price has increased 13.4 percent YoY to $340,000—though it’s just below the peak of $350,000. And within the nation’s 50 largest metros, prices increased by 8.8 percent—nearly the same as the month prior. The largest price gains were seen in Austin with a 20% increase, Riverside-San Bernardino with a 17.2% increase and New Orleans with a 16.8% increase.

“The shortage of homes for sale has been an ongoing issue for the last couple of years, but in December the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history,” said Realtor.com® Chief Economist Danielle Hale. “Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new COVID cases may slow the number of sellers entering the market. Newly listed properties have shown mixed trends. While December’s data points to possible relief on the horizon, this figure has been impacted the most in areas with large COVID surges, and consistent improvement will be key in order to get out of this extreme shortage. We eventually expect to see improvements in the supply of homes for sale, especially in the second half of the year. Until then, finding a home will continue to be a top challenge for buyers across all price ranges.”

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Reform of the Housing Finance System a Top Priority

The National Association of Home Builders (NAHB) created a white paper in 2012 called “A Comprehensive Framework for Housing Finance System Reform” which recommended utilizing both public and private sources of housing capital to keep the current federal government housing agencies. Recently NAHB has amended the 2012 white paper regarding the advancing of housing finance so there will be a secure and strong national financial market, job market and economic growth.

This is important when it comes to the housing market.  Without housing finance there would be no reason for new

developments and construction of new housing around the country. The home building industry is dependent on the housing finance system. One of the biggest hindrances mentioned in the white paper are the credit challenges home builders and home buyers are still facing that stemmed from the Great Recession.

The white paper clearly defines the importance of federal government support within the new system but limits the extent of the federal government’s duties. Conventional mortgages will be supported by private capital and a privately funded, mortgage-backed insurance fund with a federal government backstop to ensure it will be covered in case of a cataclysmic occurrence such as what happened in 2008.  Now the housing finance will be more private-sector with Fannie Mae and Freddie Mac transforming into a private-sector oriented system.

NAHB has challenged Congress and federal regulators to redefine housing finance reform because every American should have a decent place to live as stated in The Housing Act of 1949. 

Homeownership is one of the best financial decisions one could make and proves to be a stable investment. It provides solid jobs for Americans through home building and manufacturing products used in construction.  Hopefully these steps and challenges will reduce the risk that America will be hit by another Great Recession.

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Green Building – Tax and Rebate Benefit for Homeowners

There are always tax benefits for taxpayers who own their own home. New home buyers and remodeling homeowners can accrue tax credits when using green building techniques. Congress established these energy-efficiency tax incentives in 2005 which include tax code section 45L credit for the construction of energy efficient homes, 25C credit for retrofitting/remodeling existing homes and 25D credit for the installation of power production property in new and existing homes.

The National Association of Home Builders (NAHB) believes that green building is so important that they started to promote the concept in 2004 and created the first certification program for using green building techniques called

Certified Green Builder.  A good majority of new home builders and remodelers are Certified Green Builders which include some of the top builders in St. Tammany Parish. In fact, some of the builders who build homes in Bedico Creek are Certified Green Builders.

There are many green building techniques that are used today which include double and even triple pane energy efficient windows that will keep in heat or keep solar energy out (Low-E and Argon gas windows), green roofs or cool roofs which will either absorb or reflect heat, high performance insulation that is design to seal a home more effectively against elements, enhanced ventilation that moves heat and cool air through the home, ceiling fans, water conservation fixtures, solar power, wind power, thermal solutions (high efficiency HVAC systems and programmable thermostats), ENERGY STAR® appliances and paint which stands up to harsh elements.

Where can we find the residential energy credits? Windows such as Low-E and Argon gas windows, high performance insulation, roof improvements, energy efficient doors, and ENERGY STAR® water heaters / AC’s / heat pumps can be applied toward the 25C credit. Be aware of the rule changes to the 25C credit which include a 10% rate and a $500 lifetime cap. Data indicates that roof improvements are the biggest claims for the 25C credit. The 25D is the more popular of the two tax codes.  The credits can be applied through the use of solar electric, solar water heating, wind turbines, geothermal heat pumps and fuel cells. Solar electrical remodeling won for the most claimed activity for the 25D credit. In 2012, the latest IRS tax data, $1.9 billion cost for solar electric and $700 million for geothermal heat pumps qualified for the 25D credit.  The total for 2012 was $3 billion in qualified installations that were connected to the 25D.

Going green has two great benefits for the consumer as a homeowner and a taxpayer, you not only save on your monthly energy bills but you can save on your taxes with these tax credits. Builders also benefit and should consider incorporating the 25C and 25D qualified green building products into new housing and remodeling projects.

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