Nationwide housing production rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000 units, according to the U.S. Commerce Department. This is the highest pace of new-home construction since July of 2008.
“This report is in line with our latest builder surveys, which show improving confidence and optimism in the marketplace as buyers take advantage of low mortgage rates and very attractive prices,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Builders are acting to meet rising demand while continuing to exercise caution by pulling a modest increase in the number of single family permits as the market continues to gradually gain its footing.”
“Today’s report bears out similar changes in other economic indicators that housing continues to recover at a slow but steady place, and is right in line with our expectations of modest month-to-month growth,” said NAHB Chief Economist David Crowe. “However, we still have a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery.”
Single-family housing starts in October were virtually unchanged at 594,000 units while multifamily production posted an 11.9 percent gain to 300,000 units – the best pace since July of 2008.
On a regional basis, overall housing starts rose 17.2 percent in the West and 8.9 percent in the Midwest while posting a storm-related decline of 6.5 percent in the Northeast and 2.5 percent in the South.
Permit issuance, which can be a harbinger of future building activity, fell 2.7 percent to a seasonally adjusted annual rate of 866,000 units in October. The drop in permits was focused in the apartment sector as multifamily permits fell 10.6 percent from an unusually high September level to 304,000 units. Meanwhile single-family permits rose 2.2 percent to 562,000 units.
The Home Builders Association of Greenville are your neighbors and community leaders providing education and support for building industry professionals. We create jobs, encourage homeownership, and promote responsible growth throughout the upstate of South Carolina.
Tuesday, December 11, 2012
Builder Confidence Rises Five Points in November
Builder confidence in the market for newly built, single-family homes posted a solid, five-point gain to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for November, released today. This marks the seventh consecutive monthly gain in the confidence gauge and brings it to its highest point since May of 2006.
“Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.”
“While our confidence gauge has yet to breach the 50 mark -- at which point an equal number of builders view sales conditions as good versus poor -- we have certainly made substantial progress since this time last year, when the HMI stood at 19,” observed NAHB Chief Economist David Crowe. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”
Derived from a monthly survey that NAHB has been conducting for the past 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI’s component indexes registered gains in November. The component gauging current sales conditions posted the biggest increase, with an eight-point gain to 49 – its highest mark in more than six years. Meanwhile, the component measuring sales expectations for the next six months held above 50 for a third consecutive month with a two-point gain to 53, and the component measuring traffic of prospective buyers held unchanged at 35 following a five-point gain in the previous month.
All four regions of the country posted gains in their HMI three-month moving averages as of November. The South posted a four-point gain to 43, while the Midwest and West each posted three-point gains, to 45 and 47, respectively, and the Northeast posted a two-point gain to 31. (Note, the HMI survey was conducted in the two weeks immediately following Hurricane Sandy and therefore does reflect builder sentiment during that period.)
Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at www.nahb.org/hmi. More information on housing statistics is also available at: http://www.housingeconomics.com/.
“Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.”
“While our confidence gauge has yet to breach the 50 mark -- at which point an equal number of builders view sales conditions as good versus poor -- we have certainly made substantial progress since this time last year, when the HMI stood at 19,” observed NAHB Chief Economist David Crowe. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”
Derived from a monthly survey that NAHB has been conducting for the past 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI’s component indexes registered gains in November. The component gauging current sales conditions posted the biggest increase, with an eight-point gain to 49 – its highest mark in more than six years. Meanwhile, the component measuring sales expectations for the next six months held above 50 for a third consecutive month with a two-point gain to 53, and the component measuring traffic of prospective buyers held unchanged at 35 following a five-point gain in the previous month.
All four regions of the country posted gains in their HMI three-month moving averages as of November. The South posted a four-point gain to 43, while the Midwest and West each posted three-point gains, to 45 and 47, respectively, and the Northeast posted a two-point gain to 31. (Note, the HMI survey was conducted in the two weeks immediately following Hurricane Sandy and therefore does reflect builder sentiment during that period.)
Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at www.nahb.org/hmi. More information on housing statistics is also available at: http://www.housingeconomics.com/.
U.S. House Prices Rose 1.1 Percent in Third Quarter 2012
U.S. house prices rose 1.1 percent from the second quarter to the third quarter of 2012 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac mortgages. Seasonally adjusted house prices rose 4.0 percent from the third quarter of 2011 to the third quarter of 2012. FHFA’s seasonally adjusted monthly index for September was up 0.2 percent from August.
“With significant growth in home prices during the quarter and a modest inventory of homes
available for sale, house price movements in the third quarter were similar to what we observed
in the spring,” said FHFA Principal Economist Andrew Leventis. “The past year has seen
consistent price increases, but a number of factors continue to affect the recovery in home
prices such as stagnant income growth, high unemployment levels, lingering uncertainty about
the macroeconomy, and the large number of homes in the foreclosure pipeline.”
FHFA’s expanded-data house price index, a metric introduced in August 2011 that adds transactions information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 1.0 percent over the latest quarter. Over the latest four quarters, the index is up 3.3 percent. While the national, purchase-only house price index rose 4.0 percent from the third quarter of 2011 to the third quarter of 2012, prices of other goods and services rose 1.5 percent over the same period. Accordingly, the inflation-adjusted price of homes rose approximately 2.5 percent over the latest year.
Significant Findings:
“With significant growth in home prices during the quarter and a modest inventory of homes
available for sale, house price movements in the third quarter were similar to what we observed
in the spring,” said FHFA Principal Economist Andrew Leventis. “The past year has seen
consistent price increases, but a number of factors continue to affect the recovery in home
prices such as stagnant income growth, high unemployment levels, lingering uncertainty about
the macroeconomy, and the large number of homes in the foreclosure pipeline.”
FHFA’s expanded-data house price index, a metric introduced in August 2011 that adds transactions information from county recorder offices and the Federal Housing Administration to the HPI data sample, rose 1.0 percent over the latest quarter. Over the latest four quarters, the index is up 3.3 percent. While the national, purchase-only house price index rose 4.0 percent from the third quarter of 2011 to the third quarter of 2012, prices of other goods and services rose 1.5 percent over the same period. Accordingly, the inflation-adjusted price of homes rose approximately 2.5 percent over the latest year.
Significant Findings:
- The seasonally adjusted purchase-only HPI rose in the third quarter in 39 states and the District of Columbia.
- Of the nine census divisions, the Mountain division experienced the strongest increase in the latest quarter, posting a 3.0 percent price increase. House prices were weakest in the East South Central division, where prices fell 0.2 percent over the quarter.
- As measured with purchase-only indexes for the 25 most populated metropolitan areas in the U.S., third quarter price increases were greatest in the Phoenix-MesaGlendale, AZ Metropolitan Statistical Area (MSA). That area saw prices increase by7.2 percent between the second and third quarters. Prices were weakest in the Edison-New Brunswick, NJ metropolitan division, where prices fell 2.2 percent over that period.
- The monthly seasonally adjusted purchase-only index for the United States has increased for 8 consecutive months.
- FHFA’s new “distress-free sales” house price index suggests that price gains in the latest quarter may be partially attributable to decreases in the share of distressed sales in the latest quarter. For 11 of the 12 metropolitan areas covered by the new set of indexes, the distress-free measures—which remove the effect of distressed sales—showed more modest price gains than were evident in the traditional purchase-only indexes.
FHFA Reports Lower Mortgage Interest Rates
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 3.44 percent based on loans closed in October. There was a decrease of 0.12 from the previous month. In March of 2012, FHFA began calculating interest rates using un-weighted survey data. The complete contract rate series can be found at http://www.fhfa.gov/Default.aspx?Page=251.
The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 14 basis points to 3.62 in September. 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 October 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-September.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.44 percent in October, down 11 basis points from 3.55 percent in September. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.57 percent in October, down 10 basis points from 3.67 percent in September. This report contains no data on adjustable-rate mortgages due to insufficient sample size.
Initial fees and charges were 1.05 percent of the loan balance in October, up 10 basis points from September. Twenty-one percent of the purchase-money mortgage loans originated in September were "no-point" mortgages, down one percent from the share in September. The average term was 27.5 years in October, up 0.1 years from September. The average loan-to-price ratio in October was 75.8 percent, up 0.2 percent from 75.6 percent in September. The average loan amount was $257,400 in October, up $2800 from $254,600 in September.
The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased 14 basis points to 3.62 in September. 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 October 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-September.
The contract rate on the composite of all mortgage loans (fixed- and adjustable-rate) was 3.44 percent in October, down 11 basis points from 3.55 percent in September. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.57 percent in October, down 10 basis points from 3.67 percent in September. This report contains no data on adjustable-rate mortgages due to insufficient sample size.
Initial fees and charges were 1.05 percent of the loan balance in October, up 10 basis points from September. Twenty-one percent of the purchase-money mortgage loans originated in September were "no-point" mortgages, down one percent from the share in September. The average term was 27.5 years in October, up 0.1 years from September. The average loan-to-price ratio in October was 75.8 percent, up 0.2 percent from 75.6 percent in September. The average loan amount was $257,400 in October, up $2800 from $254,600 in September.
NAHB Takes Fight for Property Owners to U.S. Supreme Court
Home builders are in the crosshairs as cash-strapped local governments that have seen their budgets decimated during the economic downturn look for ways to shift infrastructure costs to the private sector.
For years, local governments have pursued arrangements with developers to extract certain concessions in exchange for the opportunity to develop. For example, a locality may ask a developer to improve the street in anticipation of the increased traffic that a development may bring.
In many cases, it's a fair request. However, some local governments seem all too willing to stretch the boundaries to the limit – and now the courts are backing them.
A recent ruling by the Florida Supreme Court would effectively allow local governments to force builders to provide community services or pay for improvements on public lands miles away from their property before they can receive a permit to develop their own private property. Following an appeal, the case now moves to the highest court in the land.
Taking the Lead
Leading the fight on behalf of property owners and acting to ensure that the interests of NAHB members are appropriately represented, NAHB on Nov. 28 filed an amicus (friend of the court) brief with the U.S. Supreme Court in Koontz v. St. Johns River Water Management District, a landmark case with major implications for land developers nationwide.
NAHB has been joined by more than a dozen other prominent real estate and business organizations, including the U.S. Chamber of Commerce, the National Mining Association, the American Farm Bureau Federation and the Real Estate Roundtable.
The filing in support of Koontz and the rights of all property owners details how the defendant has overstepped its bounds.
“No matter how well intentioned the government may be, the Constitution was not designed to make government’s life easier at the expense of private citizens,” the brief said. “Plainly, there must be some limit on the ability of government agencies to impose conditions on the issuance of permits. Otherwise, no citizen’s rights as to anything would be secure.”
Background
Coy A. Koontz owned 14.2 acres of vacant land in Central Florida and wanted to improve 3.7 acres of the property. In exchange for the opportunity to develop, Koontz offered to dedicate the remainder of his property – more than 75% of his land – to the state for conservation.
The government rejected the proposal and pressed Koontz for more, demanding that Koontz also enhance 50 acres of government-owned wetlands – more than four miles away from Koontz's property – by replacing culverts and filling in some ditches. The government never demonstrated how the off-site improvements to government-owned land relate to the alleged impact of Koontz’s dredge-and-fill activities on his own property.
But when Koontz refused the district’s demand, his permit applications were denied outright. The district told Koontz it would not issue permits for his property until he agreed to the district’s off-site work conditions.
Koontz sued on the ground that the government was taking his land without just compensation.
Unfortunately, the Florida Supreme Court ruled that the district's demand was not a "taking" in this case. The court also ruled that it was legal for the government to refuse to issue the permit until Koontz agreed to make the improvements.
What’s at Stake
If the U.S. Supreme Court allows the Florida Supreme Court’s decision to stand, it could be opening the door to allow any municipality in America to force any home owner who requests a permit to remodel their home to perform expensive, unnecessary and unrelated improvements before receiving permission to upgrade their own house.
In today’s tough economy, localities struggling to make ends meet and balance their budgets can be expected to continue to try to shift infrastructure and service costs to the private sector. If the Florida Supreme Court’s decision is upheld, that shift will be expedited by putting the burden back on developers (both legally and financially) and by forcing developers to accept invalid exactions before having their day in court.
NAHB will keep its members apprised as this case proceeds. The Supreme Court is expected to deliver its decision by June 30.
NAHB Legal Resources
NAHB’s proactive litigation efforts have forced governmental bodies and agencies at the state and federal levels to scale back or entirely eliminate efforts to limit or stop development on countless parcels nationwide.
NAHB provides a myriad of legal resources for both members and state and local association staff. While the NAHB staff counsel cannot replace your local attorney, NAHB can offer legal research, litigation funding, and/or litigation strategy, depending on the situation and the issues involved. See the Legal Services for details.
The NAHB Legal Research Program also provides free legal research assistance and information on building industry-related issues to all members. More information can be found here.
For years, local governments have pursued arrangements with developers to extract certain concessions in exchange for the opportunity to develop. For example, a locality may ask a developer to improve the street in anticipation of the increased traffic that a development may bring.
In many cases, it's a fair request. However, some local governments seem all too willing to stretch the boundaries to the limit – and now the courts are backing them.
A recent ruling by the Florida Supreme Court would effectively allow local governments to force builders to provide community services or pay for improvements on public lands miles away from their property before they can receive a permit to develop their own private property. Following an appeal, the case now moves to the highest court in the land.
Taking the Lead
Leading the fight on behalf of property owners and acting to ensure that the interests of NAHB members are appropriately represented, NAHB on Nov. 28 filed an amicus (friend of the court) brief with the U.S. Supreme Court in Koontz v. St. Johns River Water Management District, a landmark case with major implications for land developers nationwide.
NAHB has been joined by more than a dozen other prominent real estate and business organizations, including the U.S. Chamber of Commerce, the National Mining Association, the American Farm Bureau Federation and the Real Estate Roundtable.
The filing in support of Koontz and the rights of all property owners details how the defendant has overstepped its bounds.
“No matter how well intentioned the government may be, the Constitution was not designed to make government’s life easier at the expense of private citizens,” the brief said. “Plainly, there must be some limit on the ability of government agencies to impose conditions on the issuance of permits. Otherwise, no citizen’s rights as to anything would be secure.”
Background
Coy A. Koontz owned 14.2 acres of vacant land in Central Florida and wanted to improve 3.7 acres of the property. In exchange for the opportunity to develop, Koontz offered to dedicate the remainder of his property – more than 75% of his land – to the state for conservation.
The government rejected the proposal and pressed Koontz for more, demanding that Koontz also enhance 50 acres of government-owned wetlands – more than four miles away from Koontz's property – by replacing culverts and filling in some ditches. The government never demonstrated how the off-site improvements to government-owned land relate to the alleged impact of Koontz’s dredge-and-fill activities on his own property.
But when Koontz refused the district’s demand, his permit applications were denied outright. The district told Koontz it would not issue permits for his property until he agreed to the district’s off-site work conditions.
Koontz sued on the ground that the government was taking his land without just compensation.
Unfortunately, the Florida Supreme Court ruled that the district's demand was not a "taking" in this case. The court also ruled that it was legal for the government to refuse to issue the permit until Koontz agreed to make the improvements.
What’s at Stake
If the U.S. Supreme Court allows the Florida Supreme Court’s decision to stand, it could be opening the door to allow any municipality in America to force any home owner who requests a permit to remodel their home to perform expensive, unnecessary and unrelated improvements before receiving permission to upgrade their own house.
In today’s tough economy, localities struggling to make ends meet and balance their budgets can be expected to continue to try to shift infrastructure and service costs to the private sector. If the Florida Supreme Court’s decision is upheld, that shift will be expedited by putting the burden back on developers (both legally and financially) and by forcing developers to accept invalid exactions before having their day in court.
NAHB will keep its members apprised as this case proceeds. The Supreme Court is expected to deliver its decision by June 30.
NAHB Legal Resources
NAHB’s proactive litigation efforts have forced governmental bodies and agencies at the state and federal levels to scale back or entirely eliminate efforts to limit or stop development on countless parcels nationwide.
NAHB provides a myriad of legal resources for both members and state and local association staff. While the NAHB staff counsel cannot replace your local attorney, NAHB can offer legal research, litigation funding, and/or litigation strategy, depending on the situation and the issues involved. See the Legal Services for details.
The NAHB Legal Research Program also provides free legal research assistance and information on building industry-related issues to all members. More information can be found here.
Remodeling a Key Element in the Nation’s Economy
Like new construction, remodeling of both owner-occupied homes and rental properties contributes billions of dollars to the nation’s economy each year as property owners update and improve residential properties.
Every $10 million in remodeling expenditures yields the following economic benefits:
Nationally, NAHB is forecasting a continued increase in the demand for residential repairs and improvements this year.
Legislation Would Improve Lead Paint Rule
One of the biggest threats to the residential remodeling industry is the EPA's Lead Paint Rule. Your HBA is working aggressively to address this threat.
NAHB has worked with members of Congress to introduce legislation that is pending in both chambers of Congress that would make much-needed improvements to the EPA’s Lead: Repair, Renovation and Painting rule.
The Lead Exposure Reduction Amendment Act of 2012 (House bill H.R. 5911and Senate bill S. 2148) would help home owners and remodelers to better comply with the costly work practices and record keeping requirements of the rule without compromising safety standards.
Your HBA is urging its members to contact their lawmakers and urge them to co-sponsor these two lead paint bills pending in the House and Senate.
Every $10 million in remodeling expenditures yields the following economic benefits:
- 111 jobs
- $8.3 million in wage and business income
- $3 million in taxes and revenue for state, local and federal governments
Nationally, NAHB is forecasting a continued increase in the demand for residential repairs and improvements this year.
Legislation Would Improve Lead Paint Rule
One of the biggest threats to the residential remodeling industry is the EPA's Lead Paint Rule. Your HBA is working aggressively to address this threat.
NAHB has worked with members of Congress to introduce legislation that is pending in both chambers of Congress that would make much-needed improvements to the EPA’s Lead: Repair, Renovation and Painting rule.
The Lead Exposure Reduction Amendment Act of 2012 (House bill H.R. 5911and Senate bill S. 2148) would help home owners and remodelers to better comply with the costly work practices and record keeping requirements of the rule without compromising safety standards.
Your HBA is urging its members to contact their lawmakers and urge them to co-sponsor these two lead paint bills pending in the House and Senate.
McGraw-Hill: Green Residential Market Share is Rising
According to McGraw-Hill Construction, since 2005 the green share of new single-family residential construction has grown dramatically--increasing from 2 percent in 2005 to 17 percent in 2011, or $17 billion in market opportunity.
McGraw-Hill Construction projects that the green market share will continue to rise to 29 percent to 38 percent in 2016, or $87 billion to $114 billion in market opportunity.
According to the same study, remodelers are reporting higher adoption of green building compared to home builders. In the next five years half of home builders expect 60 percent or more of their projects to be green, and one third expect 90 percent of their projects to be green.
By contrast, the number of remodelers reporting 60 percent or more of their projects will be green by 2016 has doubled, and the number reporting more than 90 percent of their projects will be green has tripled.
McGraw-Hill Construction projects that the green market share will continue to rise to 29 percent to 38 percent in 2016, or $87 billion to $114 billion in market opportunity.
According to the same study, remodelers are reporting higher adoption of green building compared to home builders. In the next five years half of home builders expect 60 percent or more of their projects to be green, and one third expect 90 percent of their projects to be green.
By contrast, the number of remodelers reporting 60 percent or more of their projects will be green by 2016 has doubled, and the number reporting more than 90 percent of their projects will be green has tripled.
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