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.
IN THIS EDITION CNHBA BOARD OF DIRECTORS p.2 CALENDAR OF EVENTS p.2 NEWS ACROSS THE NATION p.3-5 JIM ROTH MEMORIAL GOLF TOURNAMENT p. 6-7 2023 HOME SHOW p. 8 STUDENT SCHOLARSHIP INFO p.9
CNHBA Board of Directors President Greg Geis Vice President Dar Barnes Past President Barry Obermiller Directors Todd Enck Chris Meister Justin Oseka Dana Jelinek Tim Uhrich Mark Rainforth
CALENDAR OF EVENTS September 6 General Membership Meeting 6:30 pm Truss Craft Program by Innate Concepts (Full Circle Services) Scott Rief Dinner sponsored by Innate Concepts October 11 General Membership Meeting Pinnacle Bank note change in date November 1 General Membership Meeting First National Bank December 6 Christmas Party Truss Craft Casino Night January 20-22 Home and Builders + Garden Show Fonner Park Registration Form p. 8
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
All photos can be viewed on our website or on our facebook page.
Future Dates at Heartland Events Center & Fonner Park • Grand Island 2022 | April 7-9 2026 | April 9-11 2023 | April 13 -15 2027 | April 8 -10 2024 | April 11 -13 2028 | April 6 – 8 2025 | April 10 – 12 2029 | April 5 – 7 2030 | April 4-6 2022 Review SkillsUSA Nebraska took a delegation of 245 members (students, advisors, parents, others) to Atlanta Georgia, June 20 – 24, 2022. They brought home 47 medals which placed them 8th in the most medals taken at NLSC. That is pretty good for a state that ranks about 33rd in membership. Just a heads up – the 2023 SkillsUSA State Leadership and Skills Conference is set for April 13 – 15, 2023 at Fonner Park in Grand Island.
2022 CNHBA/Jim Roth Memorial Scholarship Sam Hartman Sam Hartman is a 2022 graduate of Grand Island Northwest and will be attending Southeast Community College-Milford in the fall. His general major will be Electrical Technology with a minor in Business. Sam is the son of Tom and Carlotta Hartman.