September 2022
July Single-Family Starts Fall to 6-Year Low
In a further sign that the housing market continues to weaken, new home sales in July fell to their lowest level since January 2016. The tepid sales pace matches declining builder confidence since the beginning of the year. The industry continues to grapple with supply chain disruptions that are delaying new home building projects and raising housing costs as mortgage interest rates increased. Sales of newly built, single-family homes in July fell 12.6% to a 511,000 seasonally adjusted annual rate from a downwardly revised reading in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales are down 29.6% from a year ago. A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. New single-family home inventory remained elevated at a 10.9 months’ supply, up 81.7% over last year, with 464,000 available for sale. However, only 45,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction. The median sales price rose to $439,400 in July, up 5.9% compared to June, and is up 8.2% compared to a year ago.
Affordability Falls in 2nd Quarter Rising mortgage rates, high inflation, low existing inventory and elevated home prices contributed to housing affordability falling to its lowest point since the Great Recession in the second quarter of 2022. According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 42.8% of new and existing homes sold in the 2nd quarter were affordable to families earning the median income of $90,000. This is a sharp drop from the 56.9% of homes sold in the first quarter that were affordable to median-income earners.
Registration Open for 2023 Builders' Show in Las Vegas The National Association of Home Builders (NAHB) officially opened online registration on Sept. 1 for the 2023 NAHB International Builders’ Show® (IBS), the largest annual light construction trade show in the world. IBS will take place in person at the Las Vegas Convention Center, Jan. 31-Feb. 2, where it will again co-locate with the National Kitchen & Bath Association’s (NKBA) Kitchen & Bath Industry Show® (KBIS) for the 10th Annual Design & Construction Week® (DCW). The two shows are expected to host more than 1,300 exhibiting brands spanning over 985,000 net square feet of exhibit space. Construction Labor Market Cools Down in June The construction labor market is cooling off as economic activity slows in response to tighter monetary policy, according to the latest job openings data from the Bureau of Labor Statistics. As forecast over the last two months, the count of open construction jobs is now falling, declining from 405,000 in May to 334,000 in June. The construction job openings rate ticked down to 4.2% in June, after reaching a data series high of 5.5% in April.
Law Will Bring Stricter Energy Codes President Biden on Aug. 16 signed into law the Inflation Reduction Act (IRA), a broad measure that seeks to address climate change, lower prescription drug prices, and reduce inflation. The law includes a $670 million grant program designed to pressure state and local governments to adopt more stringent energy codes. The practical effect will be to raise housing costs even further while doing very little to provide meaningful energy savings for residential homes and apartments.
Materials Prices Up Slightly in July The prices of building materials rose 0.4% in July (not seasonally adjusted) as softwood lumber prices increased 2.3%, according to the latest Producer Price Index (PPI) report. Prices have surged 35.7% since January 2020, although 80% of the increase has occurred since January 2021. The PPI for ready-mix concrete (RMC) gained 2.5% in July, while the PPI for gypsum products held steady and steel product prices decreased 3.7%.
Home Builders Experiencing Tighter, Costlier Credit
Big Quarter in For-Rent Starts Multifamily for-rent housing starts surged in the second quarter of 2022 to 142,000 units, according to NAHB analysis of Census data. It was the largest quarter for rental multifamily construction since the second quarter of 1986. The market share of rental units of multifamily construction starts bounced back to 96%. In contrast, the historical low share of 47% was set during the third quarter of 2005, during the condo building boom. An average share of 80% was registered during the 1980-2002 period. For the second quarter, there were just 7,000 multifamily condo starts.
During the second quarter of 2022, credit became both tighter and more costly on loans for acquisition, development & construction (AD&C) according to NAHB’s Survey on Financing. The average effective rate (based on rate of return to the lender over the assumed life of the loan taking both the contract interest rate and initial fee into account) increased substantially from the prior quarter on all four categories of loans tracked in the AD&C Survey: from 6.32% to 8.19% on loans for land acquisition, from 7.85% to 9.55% on loans for land development, from 7.38% to 8.48% on loans for speculative single-family construction, and from 7.90% to 8.63% on loans for pre-sold single-family construction.
Celebrate PWB Week, Sept. 12-16 NAHB proudly celebrates women in our industry each year during Professional Women in Building Week. Follow along on nahb.org/pwbweek during the week of Sept. 12-16, 2022 to help raise awareness of the opportunities that pursuing a career in home building provides. NAHB’s PWB Council honors the achievements of women in the industry and the work being done to promote, train, advance and add more women to the field, efforts that help address the industry’s ongoing labor shortage and remain vital to meeting our nation’s housing needs. Each day find activities for individuals and home builder associations to join the celebration.
Using Existing Structures to Increase Housing Supply
As major metro areas look to boost housing supply, existing structures might be part of the solution. According to Spectrum News New York 1, the Real Estate Board of New York estimated “converting 10% of the more than 100 million square feet of potential office space would lead to 14,000 apartments." And Washingtonian reported that "nearly 4 million square feet of outdated office space in downtown D.C. is already being converted or is under evaluation for potential transformation." The results can be stunning. Take, for example, Prospect Yard — a 2020 Multifamily Pillars of the Industry finalist — and its reinvention of the historic Stuyvesant Motor Company, a 1917 mixed-use building in downtown Cleveland. Developers utilized the existing features, such as the brick façade, steel sash windows and stone sills, to create a cool, industrial-looking 42-unit affordable housing community. Office buildings aren't the only existing- structure options for increasing supply either. Creative development can be done with vacant hotels, churches, old factories, and other structures.
Prospect Yard in downtown Cleveland
Supreme Court’s EPA Ruling Has Broad Implications
The Supreme Court’s recent decision in the case of West Virginia et al v. EPA et al could have a significant impact on federal agencies’ ability to expand regulations beyond the authority granted by Congress. The court voted 6-3 to restrict the ability of the EPA to regulate carbon emissions. Writing for the majority, Chief Justice John Roberts wrote that the EPA exceeded the authority of the Clean Air Act when it promulgated the Clean Power Plan (CPP) during the Obama administration. The decision's main relevance for NAHB is its discussion of an administrative law principle, the "major questions doctrine." The major questions doctrine holds that unless Congress clearly states its intent for a federal agency to exercise its authority to regulate an issue, courts must reject the agency's approach. The EPA will not be able to establish a similar rule affecting NAHB members through demand-side efficiency requirements. The Court's application of the major questions doctrine in this case will help NAHB and its advocacy on behalf of members in cases where an agency attempts to create new regulatory programs that depart significantly from statute.
Line-X Cape Cod Contact:Sutton Shramek Phone:508.776.4836 Website:https://www.linexcapecod.com/ Email:suttonshramek@outlook.com LINE-X®is not just for spray-on bedliners. You can spray LINE-X on just about anything that needs protection, from your boat, a roof, the foundation of a house or trailer. The LINE-X range of tough, durable coatings are guaranteed to protect more than just your truck from the harshest elements. With manufacturing and military applications, LINE-X has your vehicle, boat, home or trailer covered. We also specialize un undercoating to protect any vehicle from the Cape Cod winters, and salty waters. Elements Concrete Contact:Joren Smith Phone:774-212-1015 Website:https://www.capecodconcretecountertops.com/ Email:joren@elementsconcreteinc.com Elements concrete Inc. offers custom precast concrete designs for a wide range of applications including but not limited to countertops - indoor and out. Sinks, furniture, fireplaces, wall panels and art installations. We’re based in Chatham and do projects all over New England.
Membership Minute Sponsored By:
Please welcome our new members when you see them at our events or around town. It’s great when members do business with other members!
Beach House Shake Contact:Aaron Ishman Phone:(203)305-4854 Website:Beachhouseshake.com Email:aIshman@derbybp.com We created Beach House Shake to help preserve the distinct charm and beauty of the Cape Cod.Beach House Shake is The Authentic Composite Shingle, designed to give the authenticity and individuality of natural cedar shingles, and stay looking like the day it was installed for the life of the home.We are excited to join your organization and look forward to the opportunity to work with the HBRA, its members and the community. Interested in being a Membership Ambassador? Call Candice at 617-462-8123 for details.No heavy lifting involved!
September 13th Dinner Meeting Sea View, Dennis Safety was the topic and OSHA was in the house to deliver some great advice on safety on the job. The Cape and Islands have some of the highest OSHA infractions, injuries and death incidents on construction sites, and attendees were coached on some basic and advanced safety procedures to heed.Fines and license suspensions are real (and painful) penalties and we all want to keep our crews safe every day! Big thanks to the MidCape crew for sponsoring and supplying some tools which were raffled off at the end of the evening. Erin Cox from KAM ended up with the nail gun, which she in turn donated back to HB&RACC to give to a better suited recipient. During the Blitz Build, we met a volunteer supervisor who has purchased a lot of tools on his own for the volunteers to use. The one tool he did not have was a nail gun….so now he does.Thanks, all!
Wow! What an incredible, beautiful, amazing Blitz Build. Over 190 volunteers swarmed the site over 5 days and the end result is a cozy, charming three bedroom home for a cute little family. The outpouring of support and the quality of work delivered was truly inspiring. Mike Duffany and Peter Kimball along with Bob Ryley from Habitat for Humanity Cape Cod did a wonderful job in scheduling the many different crews and keeping everyone on track. Gail O’Rourke and the White Wood Kitchen crew did a lovely white kitchen that is both functional and durable. Outerland corralled a topnotch landscape crew to finish the job. Well done, all!
Throughout the week, the crews never went hungry, that’s for sure.We all made sure everyone stayed well hydrated and well fed every day thanks to the generous hospitality sponsors – AD Build, Cape Cod 5, The Cooperative Bank of Cape Cod, Eastern Bank, First Citizens Credit Union, Hatchville Baking Company, Martha’s Vineyard Savings Bank, Shepley Wood products and simpleHome.
HB&RACC members are truly amazing and a few shoutouts to some of our newer members here. Ron Chapman of Mannington Mills got the gorgeous engineered hardwood floors donated. Caleb Simms from Outerland stepped up to lead the landscaping charge and coordinated with 4 other companies to complete the job. SiteOne donated all of the plants and trees, and Unilock donated the hardscape for the walkway. simpleHome donated a TV and had it installed on the last day of the build and supplied breakfast for the crew. My Generation Energy installed solar panels and finished up just before the skies opened up and poured on Thursday. How lucky they were!
We heard so many incredible stories throughout the week – one crew member told me that on most jobs the subcontractors may have some rivalry or competitiveness going so they don’t really interact with each other while on the job. During this Blitz Build, everyone got along and helped each other – sometime even sharing tools. Another story is that one appliance retailer employee drove to a competitor to pick up one of the appliances so it could be installed that day.Everyone just stepped up to get it done – marvelous. Huge and heartfelt thanks to everyone who participated in this labor of love. We all know the housing situation on the Cape is challenging– and it feels great to know we are doing something meaningful to assist. To paraphrase Peter Kimball – we all worked hard and got thanks, and the photos below are our reward.
Heartfelt thanks again to all involved Can’t wait until the next one in 2024!
News You Can Use 1. Last Call….. Residential Construction Career Day aka RCC day!!! The date is October 6th. Over 250 high school students will be attending to learn about careers in the construction industry. Barnstable County Fairgrounds is the venue and there are still opportunities to be on site to talk with the students about your business and perhaps get a few interns, apprentices or employees! If you have interest in exhibiting, please contactcandice@capecodbuilders.org ASAP 2. Time to register for the first annual Cape Cod Construction Summit to take place on November 10th at the Cape Codder in HJyannis. The dayv will include CEU credit classes, exhibitors, and networking opportunities.Want to be involved?Let us know! 3. Nauset Disposal is pleased to announce its annual community fundraiser, Trash Bash, on Friday, October 21. The event will be held at Nauset Disposal’s Orleans location at 3 Rayber Road from 5:30 to 11PM.100% of the proceeds generated at Trash Bash will go to seven local nonprofit organizations: Big Brothers Big Sisters of Cape Cod and the Islands, Cape Cod Climate Change Collaborative, Cape and Islands United Way, Heroes in Transition, Homeless Prevention Council, Lower Cape Outreach Council and Wild Care. This event features live music with the Grab Brothers and DJ Trev, with dinner donated by several local restaurants, beer and wine, door prizes and more. Admission is $50 per person, and pre-registration is encouraged and can be done online at trashbash.nausetdisposal.com. Admission includes food and drink tickets, as well as an opportunity to win one of several door prizes. 4. Member request:Please Like our Facebook page and Follow Us on Instagram.If you do so, you will get regular updates on upcoming events and info sessions.Don’t miss the chance to stay informed. Got anything you would like to share with fellow members? Are you working on a great build or remodel?Let us know and we will give you some free press!Send info to:candice@capecodbuilders.org
Calendar of Events Residential Construction Career Day Oct. 6th Barnstable Fairgrounds Dinner Meeting October 11th DoubleTree, Hyannis Bowling for Beds October 20th The Lanes, Mashpee Commons Cape Cod Construction Summit November 10th Cape Codder, Hyannis Annual Meeting & Holiday Party December 13th Coonamessett Inn, Falmouth