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August 2024
Elevated mortgage rates continue to keep buyers on hold, as new home sales remained relatively flat in June. Sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slightly upwardly revised reading in May, according to recent data from HUD and the U.S. Census Bureau. The pace of new home sales in June is down 7.4% from a year earlier and is the lowest pace since November 2023. A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construct- ion: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the June reading of 617,000 units is the number of homes that would sell if this pace continued for the next 12 months. New single-family home inventory in June remained elevated at a level of 476,000, up 11.2% compared to a year earlier. This represents a 9.3 months’ supply at the current building pace, which has been supported by the ongoing shortage of resale homes. Of the new home inventory, 102,000 are completed ready-to-occupy homes, up 50% year over year. This segment represents 21% of total inventory. The median new home price was $417,300, up 2.5% compared to last month, and remained essentially flat compared to last year. Regionally, on a year-to-date basis, new home sales are down 5.5% in the Northeast and 6.7% in the South. New home sales are up 25.5% in the Midwest and 5.7% in the West.
High Rates Keep New Home Sales Soft in June
Biden Seeks Rent Caps President Biden announced in July that he would ask Congress to institute a two-year provision that would require housing providers with 50+ existing units to choose to either cap annual rent increases at 5% or lose accelerated depreciation. Biden also proposed to release some federal lands for housing, which also can only be done with congressional authority. NAHB opposes rent caps because they worsen housing affordability by discouraging new production.
Register Now for 2024 Fall Leadership Meeting NAHB committee and council members, delegates to the Leadership Council, members of the Board, and executive officers should make plans now to attend the Fall Leadership Meeting, Oct. 1-3, in San Antonio, Texas. You can view the schedule, register and book your hotel room on the Fall Leadership Meeting webpage. The deadline to take advantage of the NAHB hotel block is Sept. 6. The Fall Leadership Meeting will follow a three-day compressed schedule, with NAHB subcom- mittees meeting virtually prior to the Fall Leadership Meeting. Apply for a Prestigious NAHB Industry Award NAHB’s Industry Awards are accepting applications. These highly respected awards celebrate the best in the residential construction industry in a variety of categories. NAHB award programs include the Best in American Living Awards (BALA), the Nationals, the Custom Home Builder of the Year Award, the Multifamily Pillars Awards, the NAHB Remodelers Awards and others. Apply for the award program that’s right for your business. The deadline for entries for this year’s awards cycle is Oct. 7.
OSHA Proposes Heat Standard OSHA in July released its proposed standard for Heat Injury and Illness Prevention in Outdoor and Indoor Work Settings. If finalized, this rulemaking would mark the first federal standard requiring employers to create a plan to evaluate and control heat hazards in their workplace. According to the proposal, the standard would apply to all employers conducting outdoor and indoor work in all general industry, construction, maritime and agriculture sectors, with some exceptions.
Take Action on Codes Mandate NAHB is calling on its members to contact their members of Congress and tell them to support H.J. Res 170, a resolution that will stop HUD and the USDA from adopting the 2021 International Energy Conservation Code (IECC). A recent decision by the two agencies means they will only insure mortgages for new single-family homes if they are built to the 2021 IECC or, in the case of HUD-financed multifamily housing, built to the 2021 IECC or ASHRAE 90.1-2019.
The NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter of 2024 posted a reading of 65, down one point compared to the previous quarter (see Figure 1). The RMI is an average of two major component indices: the Current Conditions Index and the Future Indicators Index. It is based on a survey that asks remodelers to rate various aspects of the residential remodeling market “good”, “fair” or “poor.” Responses from each question are converted to an index that lies on a scale from 0 to 100. An index number above 50 indicates a higher proportion of respondents view conditions as good rather than poor.
Lowe’s Invests in Training The Lowe’s Foundation recently announced nearly $8 million in Gable Grants to a second cohort of community and technical colleges. Since awarding its first grants one year ago, the foundation has assisted in expanding skilled trades career pathways through its growing network of 35 community colleges and nonprofits in rural and urban communities across 27 states. From funding new skilled trades facilities and instructors to accreditation programs, the grants will support carpentry and construction, HVAC, electrical, plumbing and appliance repair training.
Remodeling Market Sentiment Holds Steady in Q2
Middle-Income Housing Needs The Harvard University Joint Center for Housing Studies (JCHS) recently released a white paper, “Subsidizing the Middle: Policies, Tradeoffs, and Costs of Addressing Middle-Income Affordability Challenges,” that examines 11 state and local programs designed to address middle-income housing needs amid the housing affordability crisis. The programs that the JCHS researchers analyze target middle-income rental households — which constitute 14.4 million renters, or one-third of all renters nationally, who earn between 60% and 120% of area median income (AMI) — through direct or indirect public subsidies.
What Buyers Expect to Pay vs. Actual Home Prices
There is a major gap between buyers’ expectations and home prices, according to recent surveys from NAHB and the U.S. Census Bureau. While 38% of buyers expect to pay less than $250,000 for their next home, only 5% of homes that started construction in 2023 are actually priced under $250,000. In contrast, the share of new homes being built that sell for above $250,000 is often far greater than the share of buyers seeking homes in that price range. The chart above illustrates this contrast. For new homes priced below $250,000, the red bars are longer than the blue bars, indicating that the share of prospective and recent buyers exceeds the share of new homes being built in those price ranges. Above $250,000, the opposite is true. The blue bars are longer than the red bars, indicating that the share of homes being built exceeds the share of buyers in the market at those prices.