Building Homes, Enriching Communities, Changing Lives
In the bi-weekly newsletter Eye on the Economy, NAHB Chief Economist Robert Dietz provided the following overview of the nation's economy and its impact on the housing market. Rising mortgage rates, high inflation, low existing inventory and elevated home prices caused housing affordability to fall to its lowest point since the Great Recession in the second quarter of 2022. According to the NAHB/Wells Fargo Housing Opportunity Index, just 42.8% of new and existing homes sold were affordable to a typical family. As more households are priced out of the for-sale market, a number of key housing metrics — including existing home sales, new home sales, single-family permits and single-family starts — have experienced significant year-over-year declines, characterizing the ongoing housing recession. Some markets are now seeing price declines as well. The volume of new home sales in July fell to the lowest level since January 2016. Sales of newly built, single-family homes came in at a 511,000 seasonally adjusted annual pace, which is a 12.6% decline from the June rate and 29.6% below the estimate from a year ago. Sales-adjusted inventory levels are at an elevated 10.9-month supply in July. However, only 45,000 of the new home inventory is completed and ready to occupy. This count has been rising in recent months and is up 40.6% compared to a year ago. New home sales are likely to continue to show weakness in the months ahead. Total existing home sales, as estimated by the National Association of Realtors, fell 5.9% to a seasonally adjusted annual rate of 4.81 million in July, the lowest level since May 2020. On a year-over-year basis, sales were 20.2% lower than a year ago. The July median sales price of all existing homes was $403,800, up 10.8% from a year ago, representing the 125th consecutive month of year-over-year increases — the longest-running streak on record. However, price growth is cooling quickly in most markets according to other reporting. The softening of housing demand has led to ongoing declines for home builder sentiment, per the NAHB/Wells Fargo Housing Market Index (HMI). Builder confidence fell for the eighth straight month in August, falling six points to 49 and marking the first time since May 2020 the index fell below the key break-even measure of 50. The August buyer traffic number in the builder survey was 32, the lowest level since April 2014, excluding the spring of 2020 when the pandemic first hit. Roughly one-in-five (19%) home builders in the HMI survey reported reducing prices in the past month to increase sales or limit cancellations. The median price reduction was 5% for those reporting using such incentives. The decline in the HMI is consistent with declines for single-family construction. Single-family starts decreased 10.1% to a 916,000 seasonally adjusted annual rate and are down 2.1% on a year-to-date basis. This is the lowest reading for single-family home building since June 2020. More declines lie ahead, as single-family permits decreased 4.3% to a 928,000 annual rate, and are down 5.9% on a year-to-date basis. NAHB is forecasting 2022 will be the first year since 2011 to record an annual decline in single-family home building. The multifamily sector, which includes apartment buildings and condos, decreased 8.6% to an annualized 530,000 pace. Multifamily construction remains very strong given solid demand for rental housing. The number of multifamily 5+ units currently under construction is up 24.8% year-over-year. Multifamily development is being supported by a substitution effect, with frustrated or priced-out prospective home buyers seeking rental housing. Similarly, demand for single-family rental properties is rising, leading to gains for single-family built-for-rent construction. There were approximately 21,000 single-family built-for-rent starts during the second quarter of 2022. This is a 91% gain over the second quarter 2021 total. The outlook for the housing market is now dependent on incoming inflation data and the Federal Reserve's monetary policy. It appears, for example, that the core Personal Consumption Expenditures price index measure of inflation has peaked. And some economists are forecasting the Fed will decelerate its rate hikes, with perhaps a 50 basis-point hike in September, following the 75 basis-point hikes in both June and July. Nonetheless, the Fed will continue hiking, with the bond market pricing in the 10-year Treasury above 3.1% for the first time since late June.
Careers in construction offer competitive wages and opportunities for advancement. And with half of the payroll workers in construction earning more than $49,070 a year, it is no surprise that the industry is attracting individuals from all different backgrounds. With skilled trade workers in high demand, how can the residential construction community attract and retain all those who are ready to contribute to the American Dream? In an episode of the Builders Mutual podcast, Building Progress, Judy Dinelle, Building Ambassador from 84 Lumber and Tara LeDuc, Senior Risk Management Consultant from Builders Mutual, discuss how a cultural shift on the jobsite can grow a diverse workforce. Are there potential changes employers need to make to hire more women and make their workforce more diverse? Dinelle: A lot of men ask us at Professional Women in Building or individually, what do I need to do to change? How can I take classes to learn how to change my business that will attract women and keep women working for me? What do I have to do differently? It's not like you have to revamp your whole structure or business. What you have to do is just focus on your thinking. Do you need to have more flexibility with hours, so it's not so regimented in case there's a family issue or if you have children? That goes both ways because there are a lot of stay-at-home men as well. Why do you think it's taken so long for the construction industry to make this shift to have a more diverse workforce? LeDuc: It's always been a male-dominated industry and so I think that unless we get everybody on board with changing that and shifting that…. since traditionally men hire men. I think we have to do some training perhaps and get management and corporate leaders in line with opening up and willing to make some changes. I think we get stuck in a pattern, and we don't like change generally as a society. I think we always just did it because it's always worked. But, again I think there's a huge need for a more diverse workforce and I think that it's going to happen and I'm excited about it. What specific challenges do you think women face in the construction industry not just on the jobsite but in the industry as a whole? Dinelle: I think some of the biggest issues is work-life balance. The other challenge you see is because you're a woman on the jobsite, it's actually the men that are very awkward around women on jobsite. They don't quite know what to do. They try to overexert themselves to try to help out because they think they are stronger or think I've done this for 20 years and you're just coming in. As a woman, you probably don't know as much as the other employee who is a young man standing next to you. LeDuc: There are also fewer role models for women but that is going to come with time and men getting more comfortable.
The National Association of Home Builders (NAHB) officially opened online registration today 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, for the largest annual gathering of the residential design and construction industry in the world. Furthering this year's offerings, in addition to IBS and KBIS, registrants can now attend a third industry show at the same place and time with just one badge. Registration for IBS will also allow you access to the show floor of the National Hardware Show (NHS). “There is a reason IBS is considered the essential industry experience for anyone involved in residential construction,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga. “Being able see all of the latest products, learn from experts on a range of educational topics and network with peers from across the globe all in one place, makes it an event not to be missed. And to have the added opportunity of being able to explore the exhibits of two other industry shows is an especially great value.” An Expo+Education Pass gives attendees 3-day access to all IBS Education sessions. This includes a choice of 100+ sessions led by renowned experts on a wide range of industry topics, as well as daily keynotes and sessions led by high-profile speakers on industry trends. And for those looking to make the most of their show experience, there are several pre-show learning opportunities available on January 29-30, for additional fees. As part of the pre-show offerings, NAHB Education will host one-day courses that delve deep into industry topics, all while earning NAHB continuing education credits. A new addition to this year's show, the Pro Builder and Pro Remodeler's U40 Leadership Summit is a one day educational and networking event for young housing industry leaders. And for a deeper dive into specific industry topics, attendees can participate in Pre-Show Master Workshops, in-depth, 3-hour intensive programs held the day before the show officially kicks off. The IBS show floor is always buzzing with innovative products and dynamic demonstrations. IBS attendees will have the opportunity to experience exciting show floor destinations including the Start-up Zone, featuring a glimpse of products or services that are predicted to shake up the residential construction industry, and the Home Technology Solutions Pavilion, showcasing what's next in emerging construction technology. IBS attendee favorites like the Building Zone, nextBUILD and the Jobsite Safety Zone will also return in 2023. In addition to the indoor show floor exhibits, attendees always enjoy the impressive outdoor exhibits including the Pro Builder Show Village. Numerous networking opportunities, social gatherings, interesting speakers and special events are also among the show's many draws. The 2023 show will kick off on the morning of Jan. 31 at the DCW Opening Ceremonies featuring a moderated Q&A with the country's leading advocate for skilled trades, Mike Rowe. That evening registrants can attend the Official IBS House Party at Drai's Beachclub & Nightclub. Other events throughout the week include the Young Pro Party Wednesday night, followed by the DCW Closing Concert immediately after the show floor closes on Thursday night. Attendees can also tour NAHB's official IBS show home, The New American Home® (TNAH). The home is a short bus ride from the Convention Center and is designed to showcase innovative building technologies, emerging design trends and the latest building products. Products showcased in the home are provided by members of the NAHB Leading Suppliers Council, and Professional Builder magazine will once again serve as the media sponsor of the 2023 TNAH. During September, IBS registrants can take advantage of several discounts with all registration options providing access to the exhibits of all 3 shows! A full list of offerings can be found at BuildersShow.com/fees, and featured discounts include: FREE Expo Pass for members & dealers/distributors $50 Expo Pass for non-members $100s in savings for the Expo+Education Pass for members and non-members Save on a 1-Day Education Pass Register your spouse FREE The NAHB International Builders' Show is not open to the general public. Building industry professionals and their affiliates are invited to register by visiting the show's website at BuildersShow.com.