NAHB: Single-Family Housing Starts Rise 3.2 Percent in May

Single-family housing production increased for a third consecutive month and builders pulled more permits for both single- and multifamily construction in May, according to newly released figures from HUD and the U.S. Census Bureau. The data reveals that the seasonally adjusted annual rate of single-family housing starts rose 3.2 percent to 516,000 units – the best pace since December of 2011.

In the Upstate, single-family housing starts continue to outpace the state and the nation:

• Greenville, year-to-date (through April) starts total 700, up 32 percent
• Spartanburg, starts total 200, up 28 percent
• Anderson, starts total 110, up 95 percent

“Today’s report is a good sign that builders are cautiously moving to replenish their depleted inventories of single-family homes in response to increasing buyer demand,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “In certain housing markets across the country, the momentum toward recovery is gradually building, though tough credit conditions and inaccurate appraisal values continue to weigh down that progress.”

“The latest data provides evidence of the kind of slow but steady growth that we expect to see in housing production through the end of the year, and shows that housing continues to regain strength regardless of some weakening in other parts of the economy,” said NAHB Chief Economist David Crowe. “Particularly encouraging are the gains in permit issuance posted in both the single-family and multifamily sectors in May, which are indicative of builders’ intentions to start new projects in the coming months.”

While overall housing starts posted a 4.8 percent decline to a seasonally adjusted annual rate of 708,000 units in May, all of the decrease was on the more volatile multifamily side. Single-family starts rose 3.2 percent to 516,000 units as multifamily starts declined 21.3 percent to 192,000 units.

Regionally, dips on the multifamily side drove down combined housing starts in all but the West, which registered a 14.4 percent gain. The Northeast, Midwest and South posted declines in total housing starts of 20.3 percent, 13.3 percent and 6.1 percent, respectively.

However, strong gains in new permitting activity for both single-family and multifamily homes drove the combined permitting number for May up 7.9 percent to a seasonally adjusted annual rate of 780,000 units – the strongest pace since September of 2008. Single-family permits were up 4.0 percent to 494,000 units (best pace since March of 2010) while multifamily permits gained 15.3 percent to 286,000 units.

Three out of four regions posted gains in combined permit activity in May. The Midwest, South and West posted gains of 6.1 percent, 11.1 percent and 10.5 percent, respectively, while the Northeast registered an 8.0 percent decline.

FHFA: mortgage rates drop .15 percent in May

The Federal Housing Finance Agency (FHFA) today reported that the National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage (ARM) contracts, was 3.78 percent based on loans closed in May. Beginning in March, FHFA is calculating interest rates using unweighted survey data. There was a decrease of 0.15 percent from the previous month.

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 17 basis points to 4.04 in May. These rates are calculated from the  FHFA’s Monthly Interest Rate Survey of purchase-money mortgages (see technical note).  These results reflect loans closed during the May 25 - 31 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed. Thus, the reported rates depict market conditions prevailing in mid- to late-April.

The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.78 percent in May, down 15 basis points from 3.93 percent in April. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.91 percent in May, down 12 basis points from 3.91 percent in April.

This report contains no data on adjustable-rate mortgages due to insufficient sample size.  Initial fees and charges were 1.03 percent of the loan balance in May, up 13 basis points from April. Thirteen percent of the purchase-money mortgage loans originated in May were "no-point" mortgages, down eight percent from the share in April. The average term was 27.7 years in May, up 0.4 years from 27.3 years in April. The average loan-to-price ratio in May was 76.4 percent, up 1.1 percent from 75.3 percent in April. The average loan amount was $263,200 in May, up $7,000 from $256,200 in April.

NAHB: Student Loan Debt Crisis Linked to Lower Home Values

New analysis of government data by the National Association of Home Builders (NAHB) reveals a connection between rising student loan debt and the onset of the housing slump, and offers yet another example of how lower home values have hurt millions of middle class households and threatens the fragile economic recovery.

“The rising student loan debt problem is another consequence of the housing downturn,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “As more and more parents face tighter budget restraints as a result of lower home values, this is forcing an increasing number of students to take out loans for tuition, essentially shifting some of the burden of paying for college from parents to students.”

The link between rising student loan debt and the start of the housing crisis comes on the heels of a recent report from the Federal Reserve showing that U.S. household wealth plunged nearly 40 percent from 2007 to 2010 as a result of declining home values.
“Together, these findings should serve as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward to restore the balance sheets of tens of millions of home owning families, create jobs and spur economic growth,” said Rutenberg.

To get housing back on track and provide the foundation for a long-lasting economic recovery, Rutenberg called on leaders in Washington to provide access to mortgage credit for qualified borrowers; demonstrate their support for the mortgage interest deduction; support affordable downpayments for home buyers; enact reforms in appraisal practices and oversight to ensure that appraisals accurately reflect true market values; and establish a strong housing finance system that retains a federal backstop to ensure that standard 30-year fixed-rate loans and adjustable rate mortgages remain readily available for working class households.

“Young Americans need to have the ability to pay for college in order to prepare for the jobs of the future,” said Rutenberg. “Homeownership has historically generated a thriving middle class by creating wealth and helping families to cover higher education costs. Hard-working American families and the economy will continue to struggle until we get housing back on track.”

NAHB provides a new member resource: FAQ on Southern Pine Design Values

NAHB's Construction, Codes and Standards experts recently completed a helpful "FAQ" document to address the most often-asked questions they are receiving from our members on recent changes in design values for visually graded Southern Pine lumber. 

This useful resource can be downloaded free of charge by NAHB members who are logged into our website with their username and password, and provides updated, clear information regarding the impetus for the design changes, an explanation of what the changes encompass, an idea of what to expect in the future, and a summation of how the new design values will be incorporated into today's building codes - among other topics. 

We encourage you to check out the FAQ document as well as the other resources that are available to you on Southern Pine Design Values at www.nahb.org/spdv.

NAHB: FHA Rescinds “Credit Disputes” Rule – For Now

In good news for home buyers this week, NAHB and other housing and banking industry groups have helped convince the Federal Housing Administration (FHA) to withdraw a controversial rule slated to go into effect on July 1 that would have prohibited borrowers with any credit disputes of more than $1,000 from obtaining FHA financing. 

Earlier this year, FHA issued a mortgagee letter stating that buyers either had to pay off ongoing credit disputes of more than $1,000 that appeared on their credit reports or show proof that they have entered into a repayment plan with their creditors before they could qualify for an FHA loan. NAHB and others in the housing finance community opposed this action citing concerns that it would further restrain the flow of mortgage credit and prevent creditworthy borrowers from qualifying for an FHA-insured loan. 

Thankfully, on June 15, the FHA issued an updated mortgagee letter formally rescinding its earlier ruling on this matter. However, the agency is expected to issue new guidance on this topic in the near future.

LLR: New License Bond Required Before Renewing Builders License

Residential Builders Commission (LLR) Administrator Janet Baumberger, APM, has announced that a license bond must be in place and on file with LLR for the new license term that begins July 1 before a Home Builder can renew his or her residential builders license effective July 1.  

If your license bond expires on June 30, you must renew it now before you can renew online your license if it expires at the end of this month.  In fact, the bond should be renewed quickly so that your bond is delivered LLR before you attempt to renew your license.

Residential Builders whose license expires on June 30 need to move quickly to obtain a new $15,000 license bond and renew their Residential Builders license.  Click on the links below for the information you need to renew your license.

Click here to renew your license at LLR.state.sc.us.  Don't forget to download the form to submit your new license bond.

Click here for a list of insurance companies issuing license bonds.

Click here for a list of HBA members who can help you purchase a license bond.  Select Insurance in the Business Activity search criteria area.

SC Department of Education Seeks Professionals to Advise on Assessment Tests

The SC Dept of Ed’s Office of Career and Technology Education has developed and piloted tests for high school career and technology education (CATE) program completers in a number of areas. Completers are students who take four courses in a particular CATE program. We are now at the point of setting cut scores for the tests (to determine pass-fail status) and need business-industry input to complete the task. We are requesting the assistance of two subject matter experts (SMEs) in Building Construction and one in Carpentry to participate in 3-hr small group work sessions with two of the teachers who helped develop each test. This activity will be led by our consortium, CTECS, and is taking place during the SC Education and Business Summit, our annual conference, at the TD Center in Greenville. CTECS will provide instruction in the process, and we will cover conference registration which includes all conference activities and meals Sun through Wed.  http://www.ebsummit.info/

• Building Construction group, 9:00 a.m.-12:00 p.m., Room 100-B, TD Convention Center, Wed, June 27 
• Carpentry group, 1:00-4:00 p.m., Room 100-A, TD Convention Center, Wed, June 27 

Please contact Amy McCaskill at 803-446-5168 (cell) or amccaski@ed.sc.gov if able to participate.