Compare Your Employee Compensation Against Industry Standards

Get an inside look at building industry employee compensation trends across the country with the newly released study conducted by the National Association of Home Builders Economics & Housing Policy Group: The 2014 Single-Family Builder Compensation Study.

Published by National Association of Home Builders BuilderBooks, the study provides compensation and benefits data for 39 common positions at single-family home building companies. The study shows average total compensation and the prevalence of benefits offered to each position by:

• geographic region
• 2014 dollar volume
• number of single-family units started in 2013
• number of employees on payroll

The study is based on data collected in July 2014 from builders across the country. It’s divided into two sections that present the survey findings from different perspectives:
Compensation and Benefits across 39 Positions—a broad view of the full-time positions at single-family building companies as well as a comparison of total compensation and benefits across positions.

• Compensation and Benefits by Position—a detailed view of each position’s average compensation and benefits.
• Results from this survey provide single-family builders with up-to-date information that can be used to benchmark their employees’ level of compensation and benefits.

The 2014 Single-Family Builder Compensation Study is available at BuilderBooks.com or by calling 800-223-2665. It costs $79.95 for National Association of Home Builders members and $149.95 retail.

The eBook format available at ebooks.builderbooks.com allows readers to view the study directly on their computer, iPad and Android. The price: $55.99 for National Association of Home Builders members, $89.99 retail.

Increase in Sales of Existing and New Homes

Existing Home Sales

Existing home sales, as reported by the National Association of Realtors (NAR), surged 14.7% in December, including an increase in the first-time buyer share to 32%, the highest share since August. December sales snapped back from a November decline partially attributable to delays in closings from the rollout of the Know Before You Owe mortgage disclosure rule by the Consumer Financial Protection Bureau (CFPB). The new rule was designed to help consumers understand their loan options and avoid closing cost surprises. Total existing home sales in December increased to a seasonally adjusted rate of 5.46 million units combined for single-family homes, townhomes, condominiums and co-ops, up from 4.76 million units in November. December existing sales were up 7.7% from the same period a year ago.

Existing sales increased in all regions, ranging from 8.7% in the Northeast to 23.2% in the West. Year-over-year, all regions increased, ranging from 4.6% in the South to 11.9% in the Northeast.

Total housing inventory decreased by 12.3% in December, and is 3.8% lower than its level a year ago. At the current sales rate, the December unsold inventory represents a 3.9-month supply, down from a 5.1-month supply in November. Some 32% of homes sold in December were on the market for less than a month.

Distressed sales are defined as foreclosures and short sales sold at deep discounts. The distressed sales share decreased to 8% in December from 9% in November. The December all-cash sales share decreased to 24% from 27% in November and 26% in December 2014. Individual investors purchased a 15% share in December, down from 16% in November and 17% a year ago.

The December median sales price of $224,100 was 7.6% above last December, and represents the 46th consecutive month of year-over-year increase. The median condominium/co-op price of $209,900 in December was up 4.9% from last December.

Although the Pending Home Sales Index fell slightly in November, the sharp volatility in November and December sales was a function of implementing a new regulation. Builder sentiment remains strong, and the tight inventory of existing homes bodes well for new single-family sales in 2016.

“This is a really good indicator that the real estate market is returning to normal levels. When existing home sales rise it stimulates sales of new homes, and it stimulates remodeling activity," said Home Builders Association of Greenville President Joe Hoover, APB, of Hoover Custom Homes.

New Home Sales

Sales of newly built, single-family homes rose 14.5% to 501,000 units in 2015: the highest level since 2007, according to newly released data from the Department of Housing and Urban Development and the U.S. Census Bureau. Meanwhile, sales in December increased 10.8% to a seasonally adjusted annual rate of 544,000 from an upwardly revised November reading.

“The December sales report is a great end to a very strong year,” said National Association of Home Builders Chairman Ed Brady. “As we move forward in 2016, we should see the housing market continue to make lasting gains.”

“Relatively low interest rates and an improving economy are motivating buyers to make a new-home purchase,” said National Association of Home Builders Chief Economist David Crowe. “Builders are upping their inventory in response to heightened consumer interest. Housing inventory is now at its highest level since October 2009.”

Sales increased in all four regions in December. The Midwest, West, Northeast and South all posted respective gains of 31.6%, 21%, 20.85% and 0.4%.

The inventory of new homes for sale was 237,000 units in December, a 5.2-month supply at the current sales pace.

Combining the reports of increasing sales of existing and new homes points to an overall increase in the housing market. Considering recent history, those in the building industry should always be cautious, but these reports point to a strengthening economy.

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Builders Build More Homes

Good news for those in the home building industry--NAHB's Eye on Housing blog reports that home building continues to grow.

Housing starts for the month of September rose 6.5% to an eight year high of 1.206 million units on a seasonally-adjusted annual basis. The increase was all in the multifamily sector, rising 18.3% to 466,000. Single-family starts were virtually unchanged at 740,000. This is the first month total starts passed the 1.2 million mark since October 2007.

The trends in both are more apparent on a quarterly or year-to-date basis that smooths some of the monthly irregularities inevitable in sample data. Single-family starts averaged 746,000 for the third quarter, up 5.7% from the second quarter. Multifamily starts averaged 418,000 for the third quarter, down 7.3% from the second quarter. On a year-to-date basis, both increased: single-family starts are up 11% from the same period in 2014 and multifamily starts are up 13.8%. These averages provide a clearer picture of the steady increase in housing construction that we have been experiencing for several years.

Permits were down 5% but that change was also due entirely to the multifamily sector. Single-family permits were virtually unchanged at 697,000 while multifamily permits fell 12.1% to an annualized rate of 406,000. Multifamily permits accelerated in June as builders drew permits to beat new regulatory deadlines and builders are working off that inventory. On a year-to-date basis, the trends are more informative with single-family increasing 9.4% and multifamily up 18.8%.

The smoothed trends tell the same story: single-family production continues to move forward at a modest pace as more current home owners feel comfortable selling their existing home and buying a new one. Younger, newly formed households continue to move out of their parents or roommate living arrangements and rent an apartment driving up the demand for more rental units. NAHB expects this same trend to continue into 2016.

Smaller Banks Are the Largest Source of AD&C Lending

Data from the FDIC indicate that smaller financial institutions, typically community banks, are the most common sources of lending for home building acquisition, development and construction (AD&C) loans. This trend strengthened during years of the housing crisis.

The FDIC data are split into two sources: commercial banks and savings institutions. As of the final quarter of 2013, total 1-4 residential construction and development loans held by commercial banks summed to $38.9 billion. Such loans from savings institutions represented a smaller source: $4.8 billion.

With respect to commercial banks, the fourth quarter 2013 FDIC data reveal that 62% of home building AD&C lending was held by banks roughly matching the community bank standard of possessing less than $10 billion in total assets. This lending was decentralized as there are almost 5800 such institutions, although it is not possible to determine how many held residential AD&C loans. In contrast, there were 90 commercial banks with more than $10 billion in assets, holding a still significant $14.7 billion in home building AD&C loans.

Nonresidential AD&C lending, which includes some land development financing and commercial real estate, is more likely to be held by larger banks, as the chart above indicates. In fact, more than half (56%) of such loans were held by commercial banks with more than $10 billion in assets.

A larger share of residential AD&C was held by larger institutions prior to the recession. The chart above notes the change in market share from the end of 2007 to the end of 2013. While the share of nonresidential AD&C held by large banks increased over this six-year period, the market share of residential AD&C shifted to smaller banks. For example, at the end of 2007, 52% of home building AD&C was held by banks with more than $10 billion in assets, a swing of 14 percentage points of market share from 2007 to 2013.

The smaller savings institutions side of the market tells a similar story. At the end of 2013, 86% of home building AD&C loans held by savings institutions was controlled by institutions with less than $5 billion in assets. A noticeable difference is that both residential and nonresidential AD&C lending shifted, in terms of market share, toward smaller savings institutions from the end of 2007 to the end of 2013, as the following chart demonstrates.

S.C. leading index of economic indicators up for 4th straight month

South Carolina’s leading index of economic indicators in May improved for the fourth straight month and hit its highest point since June 2007, according to a report posted by the S.C. Department of Commerce.

The leading index, driven in part by a jump in new-home construction and a drop in unemployment claims, reached 101.1 in May, according to the report, authored by David Clayton, director of the agency’s research division.

“Heading into summer, the housing market continues to improve in South Carolina,” the report said.

The number of residential construction permits rose 26.3% in May compared with April. Meanwhile, the total value of the permits issued in May rose 17.5%.

The coastal region posted the largest increases in new residential construction permits with Charleston up 53% in May over the previous month, and Myrtle Beach up 39%.

The median sales price for a single-family home climbed $8,500 or 5.6% in May, the reported added.

“Last month’s median sales price gain was the largest, in dollar terms, since August 2009,” the report said.

Overall, the volume of home sales in May rose 21% compared with May 2012, with the heftiest increases in Greenville and Spartanburg, each up about 40%.

On the jobs front, nonfarm employment increased 5,400 jobs or 0.3% in May from the prior month.

Meanwhile, the average weekly number of initial claims for unemployment insurance was 4,306 in May, about 2.6% less than April and about 4% less than May 2012.

Greenville reported the largest decline at 14%, followed by Spartanburg, down 9%.

Other key S.C. indicators in May included:

• Personal income decreased 1% to $163.3 billion in the first quarter.
• S.C. stock index gained 1% of 0.95 points, closing at 100.85.
• 0.01% decrease in labor force, down 276 to seasonally adjusted 2,169,409.
• No change in unemployment rate at 8%.
• 1.4% decrease in weekly manufacturing hours to 41.3 hours.
• 0.4% decrease in available online job posts to seasonally adjusted 56,400 listings.

Source: Columbia Regional Business Report

NAHB: Home Builders Building Homes that Young Buyers Want

During National Homeownership Month in June, the National Association of Home Builders (NAHB) is telling young people that the time is right to buy a home, and the nation’s builders are building the homes they want.

“As the economy recovers and young people who had to live at home with their parents move forward with their lives and achieve their dreams of homeownership, home builders are delivering homes that cater to the floor plans, features and affordability that this generation desires,” said NAHB Chairman Rick Judson, a home builder and developer from Charlotte, N.C.

More than 80 percent of Generation Y home buyers—people born in 1977 or later—said in NAHB’s 2012 consumer preference survey they prefer a highly energy efficient home that results in lower utility bills during the home’s lifetime over a lower-priced home without energy efficient features. Today’s new homes feature ENERGY STAR-rated appliances; windows, doors and insulation that better control the home’s interior climate; and other modern components such as tankless water heaters and HVAC systems that save costs on utility bills.

And cost-conscious young buyers will be happy to hear that a new home actually costs less to maintain than an older home. An NAHB study found that homes built before 1960 have average maintenance costs of $564 a year, while a home built after 2008 averages $241. Plus, mortgage rates are still very low, bolstering affordability for home buyers.

Generation Y buyers favor media and game rooms more than any other specialty rooms for their next home. New homes today not only contain these spaces, they are outfitted with the state-of-the-art electronic and wiring components that can accommodate high-definition televisions, full-house sound systems, hard-wired fire and security alarms and more.

Young buyers can check out many of the outstanding designs and features being included in homes built by NAHB members at our social media communities facebook.com/homebuildrs, pinterest.com/nahbhome and google.com/+nahb. They can also access home buying and home building information and resources on NAHB’s website at nahb.org/forconsumers.

“The time has never been better for young people to become home owners, whether it be a new home or existing,” said Judson. “There are outstanding opportunities in the current market, with near record low interest rates, competitive prices and new homes being built that include open layouts, energy efficient components and other features that cater to young buyers.”

Happy Holidays!

 The Home Builders Association of Greenville would like to wish you a Merry Christmas and a Happy New Year!  We are looking forward to a spectacular 2013 and are very thankful for our members, sponsors, and the supporters of the Home Building industry. 
The HBA of Greenville will be closed Dec. 24-25th and Dec 31st and Jan 1st.

NAHB studies show local impacts of home building

According to recent NAHB studies, the estimated one-year local impact of building 100 single-family homes in a typical metro area amounts to:

$21.1 million in local income
$2.2 million in taxes and other revenue for local governments, and
324 local jobs

The additional, annually recurring local impact of building those homes amounts to:

$3.1 million in local income
$743,000 in taxes and other revenue for local governments, and
53 local jobs

The complete “typical metro” study includes more detail (such as local jobs by industry and impacts for remodeling and multifamily construction), and explains the relatively conservative methodology NAHB uses to estimate the economic benefits of home building. This helpful resource can be printed or downloaded instantly by any NAHB member. Also available instantly and at no cost on the same web page is a companion study that shows how much new housing costs local governments in a typical metropolitan area, and how quickly new housing pays for itself.

Click here to visit The Local Impact of Home Building page on the NAHB website.

Southern Home & Garden Show Is Powerful Marketing Opportunity

Experience the excitement of the Southern Home & Garden Show in this video. Don't miss a powerful marketing opportunity to reach thousands of homeowners at the 50th Annual Southern Home & Garden Show coming March 4-6 to Carolina First Center. Produced by the Home Builders Association of Greenville and sponsored by BI-LO.

New NAHB Report Finds Small Builders ar the Maintstay of the Nation

Small home builders are the mainstay of the nation’s housing industry, including a sizable number of self-employed mom-and-pop operations, according to a new study by economists at the National Association of Home Builders.

“Small businesses have always been the predominant force in housing and they lend this industry its economic vitality,” said Bob Jones, NAHB chairman and a builder from Bloomfield Hills, Mich.

“We are seeing market conditions returning to normal in many parts of the country after a long, hard downturn, and these companies have the agility to move quickly and start leading the economy forward,” Jones said. “But first they need access to financing to build, which remains scarce during this critical phase of the recovery.”

The study notes that the small builders and tradesmen who produce the majority of the nation’s new homes “compete in a fierce marketplace that challenges their economic survival. A much higher share of small businesses both enter and fail in the residential construction industry when compared to all U.S. firms,” according to the report.

“The residential construction industry is very dynamic, and a large number of firms enter the industry each year and a large number exit each year,” the report says. “With few barriers of entry, start-up builders can launch their business with a single new home.” Most home builders and remodelers are small businesses, “further facilitating movement into the industry when opportunities improve, and exiting either because of business failure or life-cycle decisions.”

The report concludes that housing remains the domain of small businesses and looks at the Census Bureau’s Economic Census, which provides information on the size of businesses in various industries. Conducted every five years, the most recent census is based on business activity that occurred in 2007. Final tables for the construction industry were published this fall, on Oct. 19.

Among the data that provides a profile of the housing industry as of 2007:

• Slightly more than 65 percent of all home building establishments had annual receipts below $1 million. Almost 31 percent generated between $1 million and $10 million; and 4.1 percent had more than $10 million.
• In 2007, 41,483 new single-family general contractors (who build on the owner’s land) did less than $1 million in business, about a 70 percent share of the 59,679 businesses in this group. Although multifamily general contractors tend to be somewhat larger, 42 percent of them also recorded less than $1 million in yearly sales or receipts. About 60 percent of the 35,378 “operative builders” (who own the land upon which they build) did less than $1 million in business. Eighty-four percent of 73,888 residential remodelers and 61 percent of 6,462 land developers saw less than $1 million.
• Some 25 percent of $89.3 billion in total construction value delivered by single-family general contractors in 2007 was subcontracted out. Subcontracting amounted to half of $34.6 billion worth of construction among multifamily general contractors, 22 percent of $180.1 billion for operative builders and 23 percent of the $52.1 billion for residential remodelers.
• These results are consistent with findings from NAHB’s monthly Builder Economic Council survey. Among the single-family builders responding, 40 percent said they subcontracted 100 percent of their work and another 39 percent subcontracted 76 percent to 99 percent of the work. The same builders used 24 specialty trade contractors in the process of building the average single-family home.
• Seventy-four percent of a total of 477,950 specialty trade contractors rang up less than $1 million in business in 2007.
• Under U.S. Small Business Administration standards, at least 96 percent of residential builders and remodelers were small (defined as doing no more than $33.5 million in annual business). Also considered small were 94 percent of land developer (less than $7.0 million) and 98 percent of specialty trade contractor (less than $14 million) establishments. Most of the home building and trade contractor establishments were far below the SBA ceilings.

Looking beyond the Economic Census, which only counts establishments with employees on the payroll, NAHB estimates that the ratio of the income of usually small, self-employed independent contractors to wages and salaries generated in the construction industry is one to four. This is compared to a ratio of one to 10 in some other industries, such as manufacturing.

Housing is also providing more opportunities for Hispanic businesses than U.S. industries overall, the study found.

The 2007 Survey of Business Owners (SBO) recently reported that in 8.3 percent of a total 27 million businesses -- or 2.3 million -- at least 51 percent of the stock or equity was Hispanic-owned. The Hispanic share for the construction industry (both residential and nonresidential) was higher -- at 10.0 percent, or 340,766 out of 3.4 million construction firms.

Of the 2.6 million construction non-employers found in the SBO survey, 11.6 percent were Hispanic-owned, as were 12.2 percent of the 1.9 million non-employer specialty trade contractors. For several trades, the Hispanic share among non-employers was around 20 percent -- including structural steel and precast concrete, drywall and insulation, tile and terrazzo and poured concrete.