In Episode 001 of the Buildcast, host, Luke Gehbauer, interviews builder and entrepreneur, Brandon Craft. They discuss everything from Brandon’s personal life as a husband, a father and foster parent, his career path, managing client expectations, vetting clients, building styles, a little bit of LSU football and a host of other topics.
With mortgage rates at a three-year low and a healthy job market, housing affordability rose to its highest level in three years in the third quarter of 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI) released today.
In all, 63.6 percent of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. median income of $75,500. This is up from the 60.9 percent of homes sold in the second quarter of 2019 that were affordable to median-income earners and slightly higher than a first quarter 2019 reading of 62.6.
The national median home price remained steady at $280,000 in the third quarter, flat from the previous quarter, but a jump from the first quarter when the median price was $260,000. At the same time, average mortgage rates fell from 4.07 percent in the second quarter to 3.73 percent in the third quarter, reaching a three-year low.
“With mortgage rates at historic lows, consumers are experiencing greater buying power and increased affordability,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “Despite this positive development, builders still struggle with rising construction costs due to labor shortages and excessive regulations, which will continue to make housing affordability a major challenge.”
“While the Federal Reserve’s monetary policy has helped offset some of the rising construction costs, these headwinds are still affecting builders’ ability to increase inventory, particularly for entry-level buyers,” said NAHB Chief Economist Robert Dietz. “These higher production costs and other factors have caused a major decline in housing affordability over the past few years, and we expect that to remain a concern going forward.”
In the third quarter, Scranton-Wilkes-Barre-Hazleton, Pa., was the nation’s most affordable major housing market. There, 89.3 percent of all new and existing homes sold in the third quarter were affordable to families earning the area’s median income of $67,000. Meanwhile, Monroe, Mich., was rated the nation’s most affordable smaller market, with 95.3 percent of homes sold in the third quarter being affordable to families earning the median income of $79,000.
Rounding out the top five affordable major housing markets in respective order were Indianapolis-Carmel-Anderson, Ind.; Youngstown-Warren-Boardman, Ohio-Pa.; Syracuse, N.Y.; and Harrisburg-Carlisle, Pa.
Smaller markets joining Monroe, Mich., at the top of the list included Cumberland, Md.-W. Va.; Davenport-Moline-Rock Island, Iowa-Ill.; Kokomo, Ind.; and Elizabethtown-Fort Knox, Ky.
San Francisco again ranked as the nation’s least affordable major market. There, just 8.4 percent of the homes sold in the third quarter of 2019 were affordable to families earning the area’s median income of $133,800.
Other major metros at the bottom of the affordability chart were located in California. In descending order, they included Los Angeles-Long Beach-Glendale; Anaheim-Santa Ana-Irvine; San Jose-Sunnyvale-Santa Clara; and San Diego-Carlsbad.
All five least affordable small housing markets were also in the Golden State. At the very bottom of the affordability chart was Salinas, where 13.4 percent of all new and existing homes sold were affordable to families earning the area’s median income of $74,100.
In descending order, other small markets at the lowest end of the affordability scale included Santa Cruz-Watsonville; San Luis Obispo-Paso Robles-Arroyo Grande; Napa; and Santa Rosa.
Please visit www.nahb.org/hoi for tables, historic data and details.
Editor’s Note: The NAHB/Wells Fargo Housing Opportunity Index (HOI) is a measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records by Core Logic, a data and analytics company. This release incorporates the use of Freddie Mac’s 30-year fixed effective interest rates series, following the discontinuation in mid-2019 of the FHFA series previously used in HOI calculations. National and metropolitan area HOI numbers were revised back to the first quarter of 2012 using Freddie Mac’s interest rate series.
The National Association of Home Builders (NAHB) announced the finalists for its 2020 Best of 55+ Housing Awards, the premier design and marketing competition for the 55+ housing industry. A total of 107 entries were chosen as finalists and are eligible for either a gold or silver award from NAHB’s 55+ Housing Industry Council.
“The Best of 55+ Housing Awards honor builders and developers who create homes and communities that suit the specific needs of the mature buyer and renter,” said Karen Schroeder, chair of NAHB’s 55+ Housing Industry Council and vice president of Mayberry Homes in East Lansing, Mich. “Many of the communities featured well-executed amenities that focus on engagement and enrichment, and homes with creative floor plans with natural light throughout.”
Finalists were selected from entries in 42 categories representing single-family homes, rental housing, service-enriched housing, lifestyle features that 55+ buyers look for and marketing activity, plus three categories representing individuals and firms.
NAHB’s 55+ Housing Council launched the Best of 55+ Housing Awards to encourage quality and innovation in the 55+ housing market. The council provides information, education and networking opportunities for its members and provides advocacy support to NAHB on key 55+ housing issues. The awards program is sponsored by Aprilaire, BSB Design, Builders Design, Gilbert & Sheppard, KTGY Architecture + Planning, Mary DeWalt Design Group and PCR.
For more information on the awards program and a complete list of this year’s finalists, please visit www.nahb.org/55plusawards. Winners will be announced on Jan. 21, 2020, during the NAHB International Builders’ Show in Las Vegas.
NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $511.4 billion in September, the highest level since December 2018. It inched up 0.6% in September, after increasing 0.8% in August and 1% in July. Private residential construction spending rebounded in the third quarter after decreasing for the first six months of this year, as mortgage interest rates declined.
The monthly gains are largely attributed to the strong growth of spending on single family. Single family construction spending jumped to a $274.6 billion annual pace in September, up 1.3% over the August estimates. It was the highest monthly annual rate since December 2018. Multifamily construction spending dipped 0.7% in September, but was 0.9% higher since a year ago. Spending on home improvements in September was not significantly different from the August estimates.
The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the strong growth in new multifamily construction from 2010 to 2016 and relatively flat afterwards. Improvement and single-family construction showed weakness over the last year.
Spending on private nonresidential construction declined 5.7 percent over the year to a seasonally adjusted annual rate of $450.3 billion. The annual nonresidential spending decline was mainly due to less spending on the class of commercial ($19.4 billion), followed by educational category ($2.9 billion), and amusement and recreation ($2.5 billion).
The October job gains suggests the job market is still showing solid gains. Total employment increased by 128,000 and the unemployment rate inched up 0.1 percentage points to 3.6%.
Residential construction employment increased by 5,100 in October, after an increase of 5,500 jobs in September (revised). Total construction industry (both residential and nonresidential) employment totaled about 7.5 million in October.
The Bureau of Labor Statistics released the Employment Situation Summary for October. Total nonfarm payroll employment rose by 128,000 in October, following an increase of 180,000 jobs in September.
Job gains in September and August were revised higher. The September increase was revised upward to 180,000, while the August increase was revised upward to 219,000. With the upward revisions, job gains in the previous two months increased by 95,000 totally. Monthly employment growth has averaged 167,000 per month for the first ten months of 2019, compared with the average monthly growth of 223,000 over all of 2018. Over the past twelve months, total nonfarm payroll employment rose by 2.1 million, with the average monthly growth of 174,000.
In October, the unemployment rate inched up 0.1 percentage points to 3.6%. Over the month, the number of unemployed persons was little changed (+86,000) and the number of employed persons increased by 241,000. Meanwhile, the labor force participation rate, the proportion of the population either looking for a job or already with a job, ticked up by 0.1 percentage points to 63.3% in October.
Additionally, monthly employment data released by the BLS Establishment Survey indicates that employment in the overall construction sector increased by 10,000 in October. The number of residential construction jobs rose by 5,100 in October, following an increase of 5,500 jobs in September.
Residential construction employment now stands at 2.9 million in October, broken down as 847,000 builders and 2.1 million residential specialty trade contractors. The 6-month moving average of job gains for residential construction is 4,167 a month. Over the last 12 months, home builders and remodelers added 53,700 jobs on a net basis. Since the low point following the Great Recession, residential construction has gained 939,000 positions.
In October, the unemployment rate for construction workers rose to 4.7% on a seasonally adjusted basis, from 3.9% in September. Despite the monthly volatility, the unemployment rate for the construction sector remains historically low.
The most recent data release from the Bureau of Economic Analysis (BEA) showed that personal income rose slightly by 0.3% on a month-over-month basis in September after a 0.5% increase in August. The 0.3% gains in personal income, which is at a seasonally adjusted annual rate (SAAR) of $50.2 billion, were largely limited to personal interest income, farm proprietors’ income, and government social benefits to persons. However, wages and salaries stayed flat, mostly as a result of the United Auto Workers work stoppage, which pulled the wages and salaries estimates down by $1.6 billion (SAAR) in September.
Year over year, personal income increased by 4.9%. Real disposable income, income remaining after adjusting for taxes and inflation, inched up 0. 3% in September after a 0.5% gain in August.
Personal consumption expenditures (PCE), which make up more than two-thirds of the economy, increased 0.2% in September, the same margin as in August. Spending growth slightly softened compared to earlier months of this year.
Personal savings increased to $1,384 billion (SAAR) in September, accounting for 8.3% of disposable income. The savings rate rose with the onset of the Great Recession as households repaired their balance sheets. However, higher savings rates, which imply a slowdown in spending, could hold back the growth of economy.
PO Box 84579
Baton Rouge, LA 70884
E – info@hbagbr.org
P – 225.769.7696
Mon-Fri : 9:00AM – 4:00PM
Sat-Sun : Closed
© 2019 Home Builders Association. All Rights Reserved.
