Housing Affordability Slightly Lower In Third Quarter

November 13, 2014

Firming home prices in markets across the country contributed to a slight dip in nationwide housing affordability in the third quarter of 2014, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today.

In all, 61.8 percent of new and existing homes sold between the beginning of July and the end of September were affordable to families earning the U.S. median income of $63,900.  This is down from the 62.6 percent of homes sold that were affordable to median income earners in the second quarter.

The national median home price increased from $214,000 in the second quarter to $221,000 in the third quarter.  Meanwhile, average mortgage interest rates decreased from 4.44 percent to 4.35 percent in the same period.

"Low mortgage rates, strong job growth and affordable home prices make this a good time to buy a home," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"Even with nationwide home prices reaching their highest level since the end of 2007, affordability still remains fairly high by historical standards," said NAHB Chief Economist David Crowe.  "Rising employment and incomes, interest rates that remain near historically low levels, and pent-up demand should contribute to positive momentum heading into next year."

Youngstown-Warren-Boardman, Ohio-Pennsylvania claimed the title of the nation's most affordable major housing market, as 89.1 percent of all new and existing homes sold in this year's third quarter were affordable to families earning the area's median income of $52,700.  Meanwhile, Cumberland, Maryland-West Virginia and Kokomo, Indiana each tied as the most affordable smaller market, with 94.8 percent of homes sold in the third quarter being affordable to those earning the median income of $54,100 in Cumberland and $56,900 in Kokomo.  Other major U.S. housing markets at the top of the affordability chart in the third quarter included Syracuse, New York; Indianapolis-Carmel, Indiana; Harrisburg-Carlisle, Pennsylvania; and Dayton, Ohio; in descending order.

Meanwhile, smaller markets joining Cumberland and Kokomo at the top of the affordability chart included Davenport-Moline-Rock Island, Iowa-Illinois; Mansfield, Ohio; and Springfield, Ohio; in descending order.  For an eighth consecutive quarter, San Francisco-San Mateo-Redwood City, California was the nation's least affordable major housing market.  There, just 11.4 percent of homes sold in the third quarter were affordable to families earning the area's median income of $100,400.

Other major metros at the bottom of the affordability chart were Los Angeles-Long Beach-Glendale, California; Santa Ana-Anaheim-Irvine, California; San Jose-Sunnyvale-Santa Clara, California; and New York-White Plains-Wayne, New York-New Jersey; in descending order.

All five least affordable small housing markets were in California.  At the very bottom was Napa, where 10.2 percent of all new and existing homes sold were affordable to families earning the area's median income of $70,300.  Other small markets included Santa Cruz-Watsonville, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles; in descending order.

Source: National Association of Home Builders

Builder Confidence In The 55+ Housing Market Shows Strong Growth In Third Quarter

November 6, 2014

Builder confidence in the single-family housing market for the third quarter is up year over year, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today.  Compared to the third quarter of 2013, the single-family index jumped nine points to a level of 59, which is the highest third-quarter reading since the inception of the index in 2008 and the 12th consecutive quarter of year over year improvements.

"Demand for 55+ housing has never been higher, and this quarter's index clearly demonstrates that," said Steve Bomberger, chairman of NAHB's 50+ Housing Council and president of Benchmark Builders Inc. in Wilmington, Delaware.  "Consumers in this market are looking for a home that caters towards their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs."

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums.  Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).  An index number below 50 indicates that more builders view conditions as poor than good.

All components of the 55+ single-family HMI posted increased from a year ago: present sales jumped 13 points to 65, expected sales for the next six months climbed 10 points to 63 and traffic of prospective buyers rose three points to 46.

The 55+ multifamily condo HMI posted a four-point gain to a reading of 41, which is also the highest third-quarter reading since the inception of the index.  All components of the index increased for the third quarter: present sales rose five points to 42, expected sales for the next six months climbed three points to 43 and traffic of prospective buyers increased three points to 38.

The indices tracking production and demand of 55+ multifamily rentals also posted positive results in the third quarter.  Present production rose four points to 52, expected future production increased two points to 52, current demand for existing units climbed four points to 64 and future demand increased five points to 65.

"The consistent rise in home equity has contributed to the strong gains in the 55+ housing market," said NAHB Chief Economist David Crowe.  "Many consumers who had been sidelined due to the inability to sell their current homes at an acceptable price are now in a position where they can sell their homes, enabling them to rent or buy in a 55+ community."

Source: National Association of Home Builders

Housing Markets Inch Toward Full Recovery

November 6, 2014

Markets in 59 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the third quarter of 2014, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today.

This represents a year-over-year net gain of seven markets.  The index's nationwide score moved up slightly from .89 in the second quarter to .90, meaning that based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity.  Meanwhile, 66 percent of markets have shown an improvement year-over-year.

"The markets are recovering at a slow, gradual pace," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "Continued job creation, economic growth and increasing consumer confidence should help spur pent-up demand for housing."

Baton Rouge, Louisiana, continues to top the list of major metros on the LMI, with a score of 1.39 - or 39 percent better than its last normal market level.  Other major metros leading the list include Austin, Texas; Honolulu; Oklahoma City and Houston.  Rounding out the top 10 are Los Angeles; San Jose, California; Salt Lake City; New Orleans and Charleston, South Carolina - all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.

"An uptick in the number of single-family permits, which is currently only 44 percent of normal activity, is the key to a full-fledged housing recovery," said NAHB Chief Economist David Crowe.  "In the 17 metros where permits are at or above normal, the overall index shows that these markets have fully recovered."

"Nearly half of all the markets on the Leading Markets Index are up since August, which is a good sign that the ongoing housing recovery will keep moving forward in 2015," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.

Looking at smaller metros, both Midland and Odessa, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession.  Also leading the list of smaller metros are Grand Forks, North Dakota; Bismarck, North Dakota; and Casper, Wyoming, respectively.

Source: National Association of Home Builders

Single Family Production Poised To Take Off In 2015

October 31, 2014

A growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015, while a growth in renters will keep the multifamily market at cruising altitude or higher, according to economists who participated in yesterday's National Association of Home Builders (NAHB) 2014 Fall Construction Forecast Webinar.

"Single-family builders are feeling good.  They are not overly confident, but confident enough to keep moving forward," said NAHB Chief Economist David Crowe.

He added that the single-family sector will finish out the year much stronger than it began and set the stage for a robust 2015.

"This is mostly due to a significant pent-up demand and steady job and economic growth that will allow trade-up buyers who have delayed home purchases due to job insecurity to enter the marketplace," said Crowe.

A Bright Outlook

NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year.

Single-family production is expected to rise 2.5 percent this year to 637,000 units, increase an additional 26 percent next year to 802,000 and reach 1.1 million in 2016.

Multifamily starts, which Crowe said are now at a normal level of production, are projected to increase 15 percent in 2014 to 356,000 units and hold steady next year.

Meanwhile, the NAHB Remodeling Market Index, which averages ratings of current remodeling activity with indicators of future activity, matched its all-time high of 57 in the third quarter of 2014 and has been above 50 for six consecutive quarters.  A reading above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.

NAHB is forecasting that residential remodeling will post a 3.4 percent decline in 2014 over last year, due in large part to slow activity in the first quarter caused by an unusual harsh winter throughout much of the nation.  Residential remodeling activity is expected to rise 2.7 percent in 2015 and an additional 1.3 percent in 2016.

Housing Will Soon Be Undersupplied

Taking an even more bullish outlook, Mark Zandi, chief economist at Moody's Analytics, said that prospects are good for continued gains in overall economic and housing activity.

"The reason is that job growth is quite strong," said Zandi.  "Currently, we are creating about 225,000 jobs per month, or 2.75 million per year.  That is double the pace necessary to reduce unemployment and under employment, which augers very, very well for housing demand and the housing market more broadly."

With the current supply of housing running just over 1 million units on an annualized basis, Zandi said that this figure is well below what is needed for the longer run.

In the aftermath of the Great Recession, new household formations were depressed as the number of Millennials living with their parents or doubling or tripling up in apartments soared to about 3 to 4 million above normal, according to Zandi.  As the economy continues to improve and these 18-to-34 year-olds begin to form their own households, this will boost overall demand for new housing construction.

"In a normal year, there should be demand for 1.7 million units," he said, adding that each single-family home generates about 3.5 jobs over the course of a year and every multifamily unit produces 1.5 jobs over the same period.

Taking this one step further, Zandi said that increasing the housing stock by 700,000 units to meet this unmet demand would create 2.1 million jobs, which "would reduce unemployment by 1.5 percentage points."

By the end of 2017, Zandi expects mortgage rates to rise from their current rate of about 4 percent back to their "equilibrium" of 6 percent, which he noted would be very consistent with a solid job market and solid housing market.

"The housing market will be fine because of better employment, higher wages and solid economic growth, which will trump the effect of higher mortgage rates," he said.

He added that single-family starts could be closing in on 1 million units by the end of 2015 and multifamily production could go as high as 500,000 units.

Housing and Jobs Go Hand-in-Hand

Delving beneath the national numbers, Robert Denk, NAHB's assistant vice president for forecasting and analysis, noted the housing recovery will vary by state and region.

"We are getting back to the point where economic conditions are dictating the strength of local housing markets," said Denk.  "It is very clear that those states with higher levels of payroll employment or labor market recovery are associated with healthier housing markets."

Energy-producing states - North Dakota, Texas, Louisiana, Montana and Wyoming - where job growth is strong are also at the forefront of the housing recovery while Iowa and other farm belt states supported by agricultural commodities are also running above the nationwide average.

Meanwhile, states such as Nevada, Arizona, New Mexico, Alabama, Rhode Island and New Jersey that are coping with weak labor markets are also struggling to get their housing activity back on track.

Housing nationwide bottomed out at an average of 27 percent of normal production in early 2009 and the gradual and steady housing recovery now underway across the land will bring nationwide single-family housing starts to 68 percent of normal by the fourth quarter of 2015 and 90 percent of normal by the end of 2016.

In another way of looking at the long road back to normal, by the end of 2016 the top 40 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 75 percent.

Source:  National Association of Home Builders

New Report Busts Baby Boomer Housing Myths

October 30, 2014

The iconic suburban, single-family American home isn't going anywhere - and neither are their Baby Boomer owners.  Contrary to common perception, the post World War II generation will not be trading home ownership for renting, suburbs for cities, or yards and gardens for more maintenance-free living.  Rather, most Boomers will age-in-place, while Boomer movers will account for nearly one in every four dollars spent on housing in the next five years.

The report, Baby Boomers & Their Homes: On Their Own Terms - released today by The Demand Institute, a non-advocacy, non-profit think tank jointly operated by The Conference Board and Nielsen - doesn't expect this generation to "stick to the script" when it comes to retirement and housing decisions.  The research, which surveyed more than 4,000 Boomer households (ages 50-69), reveals that few have intentions of downsizing or moving to warmer climates far from their families.

"During the financial crisis, Baby Boomers saw their wealth drop dramatically.  While many have been forced to adapt their retirement and housing plans to new financial realities, they haven't abandoned those plans entirely," said Louise Keely, President of The Demand Institute.  "For the most part, they are still retiring in their mid-sixties and staying in their homes.  They value strong family relationships; they want to be near their children and grandchildren.  Additionally, many Boomers maintain plans to upsize their homes."

The next decade will see many Boomers taking on home remodeling projects, as they seek to update and increase the value of their homes.  Nearly 40 percent plan for major home improvements in the next three years.  Yet, according to the report, most continue to prioritize style over the amenities necessary for aging, such as lower maintenance and accessibility features.  Those who do move are not interested in exclusive elder communities, and if they are, they will stay close to their current homes.

"Thanks to a host of factors - not the least of which is the Great Recession - Boomers' nest eggs have shrunk dramatically in recent years," said Jeremy Burbank, Vice President at The Demand Institute.  "Financially, this generation is not necessarily ready for retirement, and half of their assets are tied up in their homes.  Despite all of this, many Boomers will look to finance their housing aspirations.  Their choices will have real impact on the housing sector in the next several years."

According to the report, Baby Boomers are carrying much more mortgage debt than earlier generations at this life stage.  Even so, most Boomers who will purchase homes plan to use mortgage financing to do so, and in contrast to Millennials, the majority is confident in their ability to qualify for financing.

Source: The Conference Board

New Home Sales Edge Up 0.2 Percent From Revised Down August Rate

October 24, 2014

Sales of newly built, single-family homes inched up 0.2 percent in September to a seasonally adjusted annual rate of 467,000 units, the highest level in six years, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Sales numbers for August were revised down from 504,000 to 466,000.

"Three consecutive months of sales upticks demonstrate steady growth in the housing market," said Kevin Kelly, chairman of the National Association of Home Builders and a home builder and developer from Wilmington, Delaware.  "Consistent job creation and low mortgage interest rates are spurring the release of pent-up consumer demand."

"The August revision was not unexpected, as this figure seemed out of line with the modest housing recovery we have been seeing," said NAHB Chief Economist David Crowe.  "The continuing increase in the inventory of new homes points to builders' confidence in the market."

The inventory of new homes for sale increased to 207,000 in September, which is a 5.3 month supply at the current sales pace.

Regionally, new home sales rose 12.3 percent in the Midwest and 2 percent in the South.  Sales were unchanged in the Northeast and dropped 8.9 percent in the West.

Source: National Association of Home Builders

Remodeling Market Index Reclaims All-Time High

October 23, 2014

The National Association of Home Builders (NAHB) Remodeling Market Index (RMI) reclaimed the high-water mark of 57 in the third quarter of 2014.  This is the sixth consecutive quarter for an RMI reading above 50.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.  The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

"Most remodelers remain confident that the market is improving as home owners undertake renovations, large and small," said NAHB Remodelers Chair Paul Sullivan, CAPS, CGR, CGP, of Waterville Valley, N.H.  "The consistency and longevity of positive RMI readings are in line with the gradual recovery of the housing industry."

The RMI's future market conditions index rose to 58 from 56 in the previous quarter.  All four of its subcomponents - calls for bids, amount of work committed for the next three months, backlog of jobs and appointments for proposals - increased or remained level with the previous quarter's reading.

The current market conditions component of the RMI increased one point to 57 this quarter.  A two point gain was made among the categories of large additions as well as smaller remodeling jobs with readings of 56 and 58, respectively.

"The stabilization of the RMI in the mid-50s for more than a year demonstrates the slow, steady recovery of the housing industry that we expect to continue," said NAHB Chief Economist David Crowe.  "The major headwind to a stronger recovery is a shortage of qualified labor and subcontractors in some parts of the country, making it difficult for remodelers to employ carpenters and finish projects as quickly and economically as many of their customers expect."

Source: National Association of Home Builders

Nationwide Housing Starts Top 1 Million For Third Time This Year

October 17, 2014

For the third time this year, nationwide housing starts surpassed the million-mark, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Total housing production in September rose 6.3 percent to a seasonally adjusted annual rate of 1.017 million units.

"These numbers show starts returning to levels we saw earlier this summer, where they hovered around one million units," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "We are hopeful this pattern of modest growth will continue as we close out the year."

"September's uptick reveals that last month's dip in production was more of an anomaly than a market reversal," said NAHB Chief Economist David Crowe.  "I expect we will see a continued recovery as job creation grows and consumers gain more confidence in the housing market."

Single-family housing starts were up 1.1 percent to a seasonally adjusted annual rate of 646,000 units in August, while multifamily production climbed 16.7 percent to 371,000 units.

Combined housing starts increased in all regions of the country.  The Northeast, Midwest, South and West posted respective gains of 5.3 percent, 3.5 percent, 4.2 percent and 13.9 percent.

Issuance of building permits registered a 1.5 percent gain to a seasonally adjusted annual rate of 1.018 million units in September.  Multifamily permits rose 4.8 percent to 394,000 units while single-family permits decreased 0.5 percent to 624,000 units.

Regionally, the Northeast, Midwest and West registered overall permit increases of 12.3 percent, 8.2 percent and 5.9 percent, respectively.  The South posted a 4.7 percent loss.

Source: National Association of Home Builders

Four Month Upturn Ends As Builder Confidence Falls In October

October 16, 2014

After four consecutive monthly gains, builder confidence in the market for newly built single-family homes fell five points to a level of 54 on the National Association of Home Builders/Wells Fargo Housing Market (HMI), released today.

"We are seeing a return to the mid-50s index level trend established earlier in the summer, which is in line with the gradual pace of the housing recovery," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"While there was a dip this month, builders are still positive about the housing market."  After the HMI posted a nine year high in September, it's not surprising to see the number drop in October," said NAHB Chief Economist David Crowe.  "However, historically low mortgage interest rates, steady job gains, and significant pent up demand all point to continued growth of 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 from 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 components declined in October.  The index gauging current sales conditions decreased six points to 57, while the index measuring expectations for future sales slipped three points to 64 and the index gauging traffic of prospective buyers dropped six points to 41.

Looking at the three month moving averages for regional HMI scores, the Northeast and Midwest remained flat at 41 and 59, respectively.  The South rose two points to 58 and the West registered a one point loss to 57.

Source: National Association of Home Builders

New NAHB Study Shows Substantial Regional Differences In New Single-Family Home Characterisitics

October 14, 2014

A recent study from the National Association of Home Builders (NAHB) revealed significant regional differences in new single-family home characteristics, ranging from price, design features, building materials and even financing.  The new findings come from analysis of the 2013 Census Bureau Survey of Construction.

Of the homes built for sale, the most expensive homes are in New England where the median sales price of new single-family homes started in 2013 reached $400,000.  The least expensive homes are in the East South Central and West South Central divisions with median sales price reaching $221,000 and $223,000 respectively.  Regional differences in home size however do not seem to correlate to home prices.  The nation's most expensive homes in New England also ranked as some of the smallest with the median size of 2,240 square feet.

"This recent analysis really illustrates the many different types of homes built throughout the country," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "It is fascinating to see how newly built homes can vary significantly not only in design features and building materials, but also in terms of lot size, home prices and financing methods used, simply based on where a home is built."

Regional home design differences include variations in siding preferences, the number of floors in a home and the type of foundation used.  Nationally, vinyl is the most common primary siding material, used in close to 31 percent of new single-family homes started in 2013, with brick following at nearly 24 percent.  Regional variations in home siding are significant however, with vinyl dominating in the Northeast and Midwest, brick in the South, and stucco was the top choice for new single-family homes in the West.

When it comes to home foundations, most homes in colder climates such as the Northeast and Midwest have basements, unlike new single-family homes in the South that are more typically built on a slab.  The data also showed that 58 percent of the homes built nationwide last year had two or more stories.  Similarly, most of the homes built in the Northeast are two stories, and more than half of the homes started last year in the West have two or more stories.  The South region varies within division but ranges from 47-65 percent of homes built with two or more stories.  In contrast however, more than half of new homes started in the Midwest have only one story.

Among outdoor features, porches ranked as the most popular feature nationwide.  Patios however dominate the new home building in the West South Central division and are as common in the West.  Despite a decline in popularity nationwide, decks remain a top choice for single-family homes built in New England where 63 percent of new homes are built with the feature.

Source:  National Association of Home Builders

Excessive Lending Standards Still Affecting Home Sales

October 9, 2014

Tight mortgage lending standards continue to affect sales for single-family builders across the nation, according to a survey released by the National Association of Home Builders (NAHB).  Well over half of the single-family builders surveyed indicated that lending standards were "tight" or "very tight," while only 11 percent indicated that standards were "somewhat easy" and no builders described them as "very easy."

"While housing has seen some positive growth throughout the year, there is no denying that tight credit conditions are hindering a full, healthy housing recovery," said NAHB Chief Economist David Crowe.  "These persistently tight mortgage credit standards continue to limit the number of creditworthy borrowers, particularly younger families and first-time home buyers, from entering the housing market."

The survey also asked builders if they had lost any sales over the last six months due to buyers not qualifying for a mortgage.  Eighty-three percent answered "yes," and of these, the average share of sales lost was 9.7 percent.  NAHB estimates that this 9.7 percent translates to 18,700 new-home sales lost because buyers were unable to qualify for mortgages.

"NAHB advocates for prudent lending standards, but we've seen banks and regulators swing the pendulum too far and create an environment where lending standards are too restrictive," said Kevin Kelly, NAHB chairman and a home builder and developer from Wilmington, Delaware.  "We want a return to reasonable lending standards where qualified borrowers are able to obtain a mortgage and create the American dream for themselves."

NAHB has supported many housing finance reform policies that would help reverse tight lending conditions, including:

• Improved credit scoring models
• A reduction of guarantee fees - known as g-fees
• Passage of the Housing Finance Reform and Taxpayer Protection Act of 2014 (Johnson-Crapo)
• FHA and FHFA to continue and expand their efforts to reduce lender concern over mortgage insurance denials and forced loan buybacks

A tight lending market for potential home buyers is just one of the headwinds impacting the housing recovery today.  Builders also report that rising costs for building materials and shortages of finished lots and labor are problems they are facing.

Source: National Association of Home Builders

New Home Sales Top 500,000 In August, Highest Level Since 2008

September 24, 2014

Sales of newly built, single-family homes increased 18 percent in August to a seasonally adjusted annual rate of 504,400 units in August, the highest level in six years, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

"This jump in sales activity is in line with our latest surveys, which indicate builders are seeing increased traffic and more serious buyers in the market for single-family homes," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

"This robust level of new home sales activity is a good sign that the housing recovery is moving towards higher ground," said NAHB Chief Economist David Crowe.  "Historically low mortgage rates, attractive home prices and firming job and economic growth should keep the housing market moving forward in 2014."

Regionally, new home sales rose 50 percent in the West, 29.2 percent in the Northeast and 7.8 percent in the South.  Sales were unchanged in the Midwest.

The inventory of new homes for sale edged up to 203,000 in August, which is a slim 4.8 month supply at the current sales pace.

Source: National Association of Home Builders

Multifamily Decline Pushes Nationwide Housing Starts Down 14.4 Percent In August

September 18, 2014

Led by a steep 31.7 percent decline in multifamily production, nationwide housing starts fell 14.4 percent to a seasonally adjusted annual rate of 956,000 units in August, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Single-family housing starts dropped 2.4 percent to a seasonally adjusted annual rate of 643,000 units.

"The August drop in multifamily starts is not too surprising, given how volatile the numbers have been the last 18 months," said David Crowe, chief economist of the National Association of Home Builders (NAHB).  "And while single-family starts registered a slight decline, low mortgage rates, affordable home prices and pent up demand will keep single-family production moving forward in 2014."

"Our members are telling us that traffic to new model home sites and sales expectations are on the rise," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "Despite the monthly blip, single-family starts are still 8 percent above last year's level."

Combined housing starts fell in all regions of the country.  The Northeast, Midwest, South and West posted respective drops of 12.9 percent, 10.3 percent, 10.9 percent and 24.7 percent.

Issuance of building permits registered a 5.6 percent loss to a seasonally adjusted annual rate of 998,000 units in August.  Multifamily permits fell 12.7 percent to 372,000 units while single-family permits decreased 0.8 percent to 626,000 units.

Regionally, the Northeast, Midwest, South and West registered overall permit losses of 11.6 percent, 12.4 percent, 0.6 percent and 8.3 percent, respectively.

Source: National Association of Home Builders

Builder Confidence Hits Highest Level Since November Of 2005

September 17, 2014

Builder confidence in the market for newly built, single-family homes rose for a fourth consecutive month in September to a level of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.  This latest four-point gain brings the index to its highest reading since November of 2005.

"Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not seeing much activity from first-time home buyers," said NAHB Chief Economist David Crowe.  "Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor."

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 from 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 components posted gains in September.  The indices gauging current sales conditions and traffic of prospective buyers each rose five points to 63 and 47, respectively.  The index gauging expectations for future sales increased two points to 67.

Builder confidence also rose across every region of the country in September.  Looking at the three-month moving average for each region, the Midwest registered a five-point gain to 59, the South posted a four-point increase to 56, the Northeast recorded a three-point gain to 41 and the West posted a two-point increase to 58.

Source: National Association of Home Builders

Millennials Will Play A Large Role In Shaping Housing Demand

September 16, 2014

• Millennials will spend over $2 trillion on home purchases and rent in the next five years.
• Millennials' housing aspirations are not so different than previous generations.
• Most plan to purchase homes and live in suburbs, and nearly all already have cars.

Millennials will play a critical role in shaping housing demand over the next five years, concludes a new report by The Demand Institute (TDI).  They will spend $1.6 trillion on home purchases and $600 billion on rent, more on a per-person basis than any other generation in the next five years.  Millennials will make up one in every four dollars spent on housing over this period.

According to the report, there will be 8.3 million new millennial households formed between now and the end of 2018 as these young adults increasingly venture out on their own.  While most of these new households will rent, many existing millennial households will purchase homes.  The vast majority plan to buy a home in the future.

Released today by The Demand Institute, a non-advocacy, non-profit think tank jointly operated by The Conference Board and Nielsen, the report Millennials and Their Homes: Still Seeking the American Dream finds that, in contrast to the common refrain about Millennials, these young adults have similar aspirations and intentions as previous generations when it comes to housing.  The vast majority plan to own homes, and nearly all already have cars.  Most planning to move intend to have their next home in the suburbs, not the city.

Millennials and Their Homes: Still Seeking the American Dream, examines the demand for housing among the youngest adults, who will drive a significant portion of this market over the next five years.  This analysis is supplemented with proprietary economic and consumer research.  The report is the result of an 18-month research program that includes in-depth interviews with 10,000 U.S. consumers, including more than 1,000 Millennials, along with analysis of 2,200 cities and towns in America and projections of the national and regional U.S. housing markets.  The findings offer insight into the forthcoming housing choice of adults aged 18-29 to help business and policy leaders identify opportunities to better meet the needs and aspirations of America's newest household heads.

"A fundamental question abou Millennials is whether their coming of age in the Great Recession has shaped their goals and aspirations to be different from those of previous generations," said Louise Keely, President of The Demand Institute and Senior Vice President at Nielsen.  "We found that, while this generation has many unique characteristics when it comes to their housing choices, they share many of the same intentions as young adults in previous decades.  As Millennials' economic situations strengthen, their demand will be important drivers of the housing market."

"One important difference between Millennials and young adults in previous decades is the unique financial challenges of home ownership today, resulting from graduating into a weak job market with growing student loan debt," said Jeremy Burbank, Vice President at The Demand Institute and Nielsen.  "Many Millennials are open to alternative approaches to housing finance, including single-family rentals and rent/own hybrid contracts such as lease-to-own."

Source: The Conference Board

Apartment And Condominium Housing Index Posts Positive Gains In The Second Quarter

August 28, 2014

The Multifamily Production Index (MPI), a leading indicator for the multifamily market released by the National Association of Home Builders (NAHB), posted a gain of five points to a reading of 58 for the second quarter.  It is the 10th straight quarter with a reading of 50 or above.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100.  The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse.  The MPI provides a composite measure of three key elements of the multifamily housing market: construction of market-rate rental units, low-rent units and "for-sale" units, or condominiums.

In the second quarter of 2014, the MPI component tracking builder and developer perceptions of market-rate rental properties had a significant increase of nine points to 68, which is the highest reading since the third quarter of 2012; low-rent units increased four points to 52; and for-sale units rose two points to 56.

"We have seen steady growth for the apartment market since 2011," said W. Dean Henry, chairman of NAHB's Multifamily Leadership Board and CEO of Legacy Partners Residential in Foster City, California.  "There will continue to be strong demand for the forseeable future, but the availability of construction labor is still proving to be a challenge."

The Multifamily Canancy INdex (MVI), which measures the multifamily housing industry's perception of vacancies, was essentially unchanged, increasing one point to 38.  With the MVI, lower numbers indicate fewer vacancies.

"The MVI, the vacancy index, has been holding steady at a healthy level of 37 to 38 since late 2013," said NAHB Chief Economist David Crowe."  Although this is slightly above the low vacancy numbers we saw in 2011 and 2012, those low numbers were the result of depressed production with few new apartments coming on line.  Meanwhile, the strength of the MPI, the production index, in the second quarter is not surprising, given that we've seen employment improve, which allows younger consumers to form their own households."

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

Source: National Association of Home Builders

New Home Sales Down 2.4 Percent In July

August 25, 2014

Sales of newly built, single-family homes fell 2.4 percent to a seasonally adjusted annual rate of 412,000 units in July, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Sales Numbers for June were revised up 16,000 to 422,000.

"We are somewhat surprised by this dip, considering builder confidence and new home starts are on the rise," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  "However, builders are increasing their level of inventory in anticipation that sales will gradually improve during the rest of the year."

"Though new home sales is a volatile metric that can fluctuate significantly from month to month, the economic fundamentals are in place for an ongoing housing recovery," said NAHB Chief Economist David Crowe.  "Consumer confidence continues to improve, mortgage rates are at yearly lows, and the labor market is healing.  These factors should help spur pent-up demand.

Regionally, new home sales fell 30.8 percent in the Northeast, 8.8 percent in the Midwest, and 15.2 percent in the West.  Sales were up 8.1 percent in the South, the country's largest region.

The inventory of new homes for sale increased to 205,000 units in July.  This is a 6.0 month supply at the current sales pace.

Source: National Association of Home Builders

Combined Single And Multifamily Gains Boost Housing Starts In July

August 19, 2014

Fueled by strong single and multifamily growth, nationwide housing starts rose 15.7 percent to a seasonally adjusted annual rate of 1.093 million units in July, the highest level since November 2013, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

"A return to production levels over one million confirms that consumer confidence continues to improve," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  "Propelled by a healthier economy, more and more people are feeling ready to buy a home."

Single-family housing starts were up 8.3 percent to a seasonally adjusted annual rate of 656,000 units in July, while multifamily production jumped 28.9 percent to 437,000 units.

Regionally in July, combined single and multifamily housing production rose in the Northeast, South and West, with respective gains of 44 percent, 29 percent and 18.6 percent.  Total production fell by 24.8 percent in the Midwest from an unusually high June level.

"July's increase in starts combined with rising builder sentiment proves that June's production dip was more of an anomaly than a reversal of the market," said NAHB Chief Economist David Crowe.  "We should continue to see a gradual, consistent recovery throughout the rest of the year."

Issuance of building permits registered an 8.1 percent increase to a seasonally adjusted annual rate of 1.052 million units in July.  Multifamily permits rose 21.5 percent to 412,000 units while single-family permits increased by 0.9 percent to 640,000 units.

The Northeast, South and West registered overall permit gains of 18.8 percent, 9.6 percent and 7.2 percent, respectively, while the Midwest posted a 0.6 percent loss.

Source: National Association of Home Builders

Builder Confidence Rises Two Points In August

August 18, 2014

Builder confidence in the market for newly built, single-family homes rose two points to 55 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today.  This third consecutive monthly gain brings the index to its highest level since January.

"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "However, builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor."

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 from 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 components posted gains in August.  The indices gauging current sales conditions and expectations for future sales each rose two points to 58 and 65 respectively.  The index gauging traffic of prospective buyers increased three points to 42.

"Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring," said NAHB Chief Economist David Crowe.  "Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand."

Every region saw a gain in its three-month moving average HMI score in August.  The Midwest posted a seven-point increase to 55 and the West registered a four-point gain to 56.  The Northeast posted a two-point gain to 38 and the South was up one point to 52.

Source: National Association of Home Builders 

Increasing Home Values Affect Housing Affordability In Second Quarter

August 14, 2014

Nationwide housing affordability dipped in the second quarter of 2014 as several markets saw a firming of home prices, according to the National Association of Home Builders/Wells Fargo Housing Opportunity (HOI), released today.

In all, 62.6 percent of new and existing homes sold between the beginning of April and the end of June were affordable to families earning the U.S. median income of $63,900.  This is down from the 65.5 percent of homes sold that were affordable to median-income earners in the first quarter.

The national median home price increased from $195,000 in the first quarter to $214,000 in the second quarter.  Meanwhile, average mortgage interest rates decreased from 4.57 to 4.44 percent in the same period.

"With interest rates near historically low levels and strengthening job growth, now continues to be a great opportunity to buy a home," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom," said NAHB Chief Economist David Crowe.  "While we are seeing a slight decrease in affordability, it is still fairly high by historical standards."

Youngstown-Warren-Boardman, Ohio-Pennsylvania claimed the title of the nation's most affordable major housing market, as 90.4 percent of all new and existing homes sold in this year's second quarter were affordable to families earning the area's median income of $52,700.  Meanwhile, Cumberland, Maryland-West Virginia was the most affordable smaller market, with 97.2 percent of homes sold in the second quarter being affordable to those earning the median income of $54,100.

Other major U.S. housing markets at the top of the affordability chart in the second quarter included Indianapolis-Carmel, Indiana; Syracuse, New York; Harrisburg-Carlisle, Pennsylvania; and Scranton-Wilkes-Barre, Pennsylvania; in descending order.

Meanwhile, smaller markets joining Cumberland at the top of the affordability chart included Kokomo, Indiana; Davenport-Moline-Rock Island, Iowa-Illinois; Battle Creek, Michigan; and Lima, Ohio; in descending order.

For a seventh consecutive quarter, San Francisco-San Mateo-Redwood City, California was the nation's least affordable major housing market.  There, just 11.1 percent of homes sold in the second quarter were affordable to families earning the area's median income of $100,400.

Other major metros at the bottom of the affordabililty chart were Santa Ana-Anaheim-Irvine, California; Los Angeles-Long Beach-Glendale, California; San Jose-Sunnyvale, Santa Clara, California; and New York-White Plains-Wayne, New York-New Jersey; in descending order.

All five least affordable small housing markets were in California.  At the very bottom was Santa Cruz-Watsonville, where 16.6 percent of all new and existing homes sold were affordable to families earning the area's median income of $77,900.  Other small markets included Napa, Salinas, Santa Rosa-Petaluma, and San Luis Obispo-Paso Robles; in descending order.

Source: National Association of Home Builders