A New Year's resolution for housing

Posted on December 26, 2012 by Jeff Widmer

Viewed daily, the stock market looks like a roller coaster. Viewed from a longer period, the market charts a smoother path that indicates a trend.

The housing market appears to follow the same course. Extrapolated from a single month, statistics show either triumph or tragedy. With hindsight, the numbers reveal a trend that, while not indicative of future performance, can give us some basis for confidence, and action.

As we close out 2012, monthly numbers for housing display a similar pattern. The S&P/Case-Shiller index of property values in 20 cities, released this morning, shows seasonally unadjusted prices dropped 0.1 percent in October from the prior month. But year over year, property values in 18 of the 20 cities increased an average of 4.3 percent.

Sales this year have followed a similar pattern. Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November, according to data from the National Association of Realtors. The November number stands 14.5 percent higher than a year ago, with sales at the highest level since November 2009.

The picture for construction remains mixed. New-home starts declined by 3 percent from October to November. Yet year over year, new construction has risen 21.6 percent.

The trend holds in some of the hardest-hit areas of the country. Take bellwether Florida. Sales of existing stock declined 4 percent in November but posted a 24 percent gain over the past 12 months. The real success story was in new-home sales. Year over year, Florida housing starts jumped in November by 60.2 percent and median home prices rose by 11.2 percent, according to data released last week by Florida Gov. Rick Scott.

In regions driven by real estate, the pattern looks even more dramatic. In Southwest Florida, sales of existing homes rose 2 percent from October to November and 25 percent from the same time a year ago. New-home construction in Sarasota and Manatee counties dipped in November by 21 percent but posted an 88 percent year-over-year increase. Those numbers are important because Southwest Florida usually experiences a season dip in real estate sales.

Despite the occasional setback, the trend seems clear. Real estate and construction are back. That’s a resolution we hope the markets can keep.

Neal Communities’ Central Park at Lakewood Ranch near Sarasota, Florida

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A New Year’s resolution for housing

Posted on December 26, 2012 by Jeff Widmer

Viewed daily, the stock market looks like a roller coaster. Viewed from a longer period, the market charts a smoother path that indicates a trend.

The housing market appears to follow the same course. Extrapolated from a single month, statistics show either triumph or tragedy. With hindsight, the numbers reveal a trend that, while not indicative of future performance, can give us some basis for confidence, and action.

As we close out 2012, monthly numbers for housing display a similar pattern. The S&P/Case-Shiller index of property values in 20 cities, released this morning, shows seasonally unadjusted prices dropped 0.1 percent in October from the prior month. But year over year, property values in 18 of the 20 cities increased an average of 4.3 percent.

Sales this year have followed a similar pattern. Total existing-home sales—completed transactions that include single-family homes, townhomes, condominiums and co-ops—rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November, according to data from the National Association of Realtors. The November number stands 14.5 percent higher than a year ago, with sales at the highest level since November 2009.

The picture for construction remains mixed. New-home starts declined by 3 percent from October to November. Yet year over year, new construction has risen 21.6 percent.

The trend holds in some of the hardest-hit areas of the country. Take bellwether Florida. Sales of existing stock declined 4 percent in November but posted a 24 percent gain over the past 12 months. The real success story was in new-home sales. Year over year, Florida housing starts jumped in November by 60.2 percent and median home prices rose by 11.2 percent, according to data released last week by Florida Gov. Rick Scott.

In regions driven by real estate, the pattern looks even more dramatic. In Southwest Florida, sales of existing homes rose 2 percent from October to November and 25 percent from the same time a year ago. New-home construction in Sarasota and Manatee counties dipped in November by 21 percent but posted an 88 percent year-over-year increase. Those numbers are important because Southwest Florida usually experiences a season dip in real estate sales.

Despite the occasional setback, the trend seems clear. Real estate and construction are back. That’s a resolution we hope the markets can keep.

Neal Communities’ Central Park at Lakewood Ranch near Sarasota, Florida

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Builders: market growing but challenges remain

Posted on December 21, 2012 by Jeff Widmer

Upward trends in recent months among a number of housing indicators point to a slow and steady growth in the nation’s housing market in 2013, but several challenges remain, according to the latest economic and housing forecast by David Crowe, chief economist for the National Association of Home Builders (NAHB).

“Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation,” said Crowe. “However, stubbornly tight lending standards for home buyers and builders, inaccurate appraisals and proposals by policymakers to tamper with the mortgage interest deduction could dampen future housing demand.”

Stating there is no consistent national trend, Crowe noted the housing recovery is local but spreading.

“We are transitioning from a very low demand level, where most people hold themselves out of the marketplace, to a case where supply will start being the problem,” he said. “As we begin to build more homes to address that supply, the new home stock will be a much more important element of the recovery.”

Setting the 2000-2002 period as a baseline benchmark for normal housing activity, Crowe said that owner-occupied remodeling has returned to previously normal levels.

“Multifamily production is also well on its way, back to 69 percent of normal,” he said. “It’s the single-family market that has the farthest to go, standing at only 40 percent of what is considered a typical market.”

Meanwhile, the number of improving housing markets across the nation continues to show considerable advancement. When the NAHB/First American Improving Markets Index (IMI) was launched in September of 2011, only 12 metropolitan areas out of 360 were on the list. As of December 2012, the list stands at more than 200 metro areas. The index is based on a six-month upswing in housing permits, employment and house prices.

“One reason we have seen such a significant jump in the IMI is because house prices are beginning to recover,” said Crowe. “House prices bottomed out early in 2011 and since early 2012 we’ve seen a 6 percent increase on a national basis.”

Another factor spurring the recovery is that household formations are on the rise. In the early part of the decade, the nation was generating 1.4 million new households each year. This collapsed to 500,000 annually during the housing downturn and currently new households are being formed at close to a 900,000 clip per annum.

“We’re not up to normal, but this is adding to demand for housing,” Crowe said.

As new households form at a growing rate, so too does builder confidence. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family housing market, has posted gains for eight consecutive months and now stands at a level of 47. This is very close to the critical midpoint of 50, where equal numbers of builders view the market as good or bad. The HMI has not been above 50 since April of 2006.

Single-family home starts are projected to climb to 534,000 units this year, up 23 percent from 2011. NAHB is forecasting that single-family new-home production will post a healthy 21 percent gain in 2013 to 647,000 units. Starts will continue their upward climb in 2014, posting a further 29 percent rise to 837,000 units.

Multifamily production is expected to rise 31 percent in 2012, reaching the 233,000 level, and posting a solid 16 percent gain in 2013 to 270,000 units. Multifamily starts are anticipated to rise an additional 9 percent in 2014 to 294,000 units.

Meanwhile, new single-family home sales are expected to rise from 307,000 last year to 367,000 this year, a 20 percent rise. Sales are anticipated to climb to 447,000 next year, up 22 percent from 2012 and jump to 607,000 in 2014, a 36 percent increase over 2013 levels.

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Builders: market growing but challenges remain

Posted on December 21, 2012 by Jeff Widmer

Upward trends in recent months among a number of housing indicators point to a slow and steady growth in the nation’s housing market in 2013, but several challenges remain, according to the latest economic and housing forecast by David Crowe, chief economist for the National Association of Home Builders (NAHB).

“Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation,” said Crowe. “However, stubbornly tight lending standards for home buyers and builders, inaccurate appraisals and proposals by policymakers to tamper with the mortgage interest deduction could dampen future housing demand.”

Stating there is no consistent national trend, Crowe noted the housing recovery is local but spreading.

“We are transitioning from a very low demand level, where most people hold themselves out of the marketplace, to a case where supply will start being the problem,” he said. “As we begin to build more homes to address that supply, the new home stock will be a much more important element of the recovery.”

Setting the 2000-2002 period as a baseline benchmark for normal housing activity, Crowe said that owner-occupied remodeling has returned to previously normal levels.

“Multifamily production is also well on its way, back to 69 percent of normal,” he said. “It’s the single-family market that has the farthest to go, standing at only 40 percent of what is considered a typical market.”

Meanwhile, the number of improving housing markets across the nation continues to show considerable advancement. When the NAHB/First American Improving Markets Index (IMI) was launched in September of 2011, only 12 metropolitan areas out of 360 were on the list. As of December 2012, the list stands at more than 200 metro areas. The index is based on a six-month upswing in housing permits, employment and house prices.

“One reason we have seen such a significant jump in the IMI is because house prices are beginning to recover,” said Crowe. “House prices bottomed out early in 2011 and since early 2012 we’ve seen a 6 percent increase on a national basis.”

Another factor spurring the recovery is that household formations are on the rise. In the early part of the decade, the nation was generating 1.4 million new households each year. This collapsed to 500,000 annually during the housing downturn and currently new households are being formed at close to a 900,000 clip per annum.

“We’re not up to normal, but this is adding to demand for housing,” Crowe said.

As new households form at a growing rate, so too does builder confidence. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family housing market, has posted gains for eight consecutive months and now stands at a level of 47. This is very close to the critical midpoint of 50, where equal numbers of builders view the market as good or bad. The HMI has not been above 50 since April of 2006.

Single-family home starts are projected to climb to 534,000 units this year, up 23 percent from 2011. NAHB is forecasting that single-family new-home production will post a healthy 21 percent gain in 2013 to 647,000 units. Starts will continue their upward climb in 2014, posting a further 29 percent rise to 837,000 units.

Multifamily production is expected to rise 31 percent in 2012, reaching the 233,000 level, and posting a solid 16 percent gain in 2013 to 270,000 units. Multifamily starts are anticipated to rise an additional 9 percent in 2014 to 294,000 units.

Meanwhile, new single-family home sales are expected to rise from 307,000 last year to 367,000 this year, a 20 percent rise. Sales are anticipated to climb to 447,000 next year, up 22 percent from 2012 and jump to 607,000 in 2014, a 36 percent increase over 2013 levels.

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Builders: market growing but challenges remain

Posted on December 21, 2012 by Jeff Widmer

Upward trends in recent months among a number of housing indicators point to a slow and steady growth in the nation’s housing market in 2013, but several challenges remain, according to the latest economic and housing forecast by David Crowe, chief economist for the National Association of Home Builders (NAHB).

“Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation,” said Crowe. “However, stubbornly tight lending standards for home buyers and builders, inaccurate appraisals and proposals by policymakers to tamper with the mortgage interest deduction could dampen future housing demand.”

Stating there is no consistent national trend, Crowe noted the housing recovery is local but spreading.

“We are transitioning from a very low demand level, where most people hold themselves out of the marketplace, to a case where supply will start being the problem,” he said. “As we begin to build more homes to address that supply, the new home stock will be a much more important element of the recovery.”

Setting the 2000-2002 period as a baseline benchmark for normal housing activity, Crowe said that owner-occupied remodeling has returned to previously normal levels.

“Multifamily production is also well on its way, back to 69 percent of normal,” he said. “It’s the single-family market that has the farthest to go, standing at only 40 percent of what is considered a typical market.”

Meanwhile, the number of improving housing markets across the nation continues to show considerable advancement. When the NAHB/First American Improving Markets Index (IMI) was launched in September of 2011, only 12 metropolitan areas out of 360 were on the list. As of December 2012, the list stands at more than 200 metro areas. The index is based on a six-month upswing in housing permits, employment and house prices.

“One reason we have seen such a significant jump in the IMI is because house prices are beginning to recover,” said Crowe. “House prices bottomed out early in 2011 and since early 2012 we’ve seen a 6 percent increase on a national basis.”

Another factor spurring the recovery is that household formations are on the rise. In the early part of the decade, the nation was generating 1.4 million new households each year. This collapsed to 500,000 annually during the housing downturn and currently new households are being formed at close to a 900,000 clip per annum.

“We’re not up to normal, but this is adding to demand for housing,” Crowe said.

As new households form at a growing rate, so too does builder confidence. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family housing market, has posted gains for eight consecutive months and now stands at a level of 47. This is very close to the critical midpoint of 50, where equal numbers of builders view the market as good or bad. The HMI has not been above 50 since April of 2006.

Single-family home starts are projected to climb to 534,000 units this year, up 23 percent from 2011. NAHB is forecasting that single-family new-home production will post a healthy 21 percent gain in 2013 to 647,000 units. Starts will continue their upward climb in 2014, posting a further 29 percent rise to 837,000 units.

Multifamily production is expected to rise 31 percent in 2012, reaching the 233,000 level, and posting a solid 16 percent gain in 2013 to 270,000 units. Multifamily starts are anticipated to rise an additional 9 percent in 2014 to 294,000 units.

Meanwhile, new single-family home sales are expected to rise from 307,000 last year to 367,000 this year, a 20 percent rise. Sales are anticipated to climb to 447,000 next year, up 22 percent from 2012 and jump to 607,000 in 2014, a 36 percent increase over 2013 levels.

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USGBC gets Google grant to promote health

Posted on November 14, 2012 by Jeff Widmer

The U.S. Green Building Council (USGBC) has received a $3 million grant from Google that it hopes will will catalyze the transformation of the building materials industry and accelerate the creation of healthier indoor environments.

“Healthy, non-toxic building materials are a critical component in green building,” said Rick Fedrizzi, president, CEO and founding chair of the USGBC. “Fostering awareness of the materials we put into our buildings is of paramount importance, since many materials can link to a host of environmental and health issues. Working with Google enables us to broaden our efforts in the materials industry as we prepare for the next version of the LEED green building program, LEED v4. This updated rating system will paint a more complete picture of materials and products, enabling project teams to make more informed decisions.”

“The idea for this project emerged from our own work at Google, where we’re committed to creating the healthiest work environments possible that help employees perform at their best,” said Anthony Ravitz, Google’s Green Team Lead. “USGBC has a deep background in spearheading research, developing a rating system spanning the globe and engaging with the many stakeholders in the building industry, making them the perfect partner to help spur real change on the healthy materials front.”

The grant will focus on three areas that will spur the creation of healthier indoor environments and encourage market transformation in the building materials industry: supporting research on building materials and health, developing new transparency tools and engaging stakeholders from across the industry.

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Improving housing markets list grows

Posted on November 6, 2012 by Jeff Widmer

The number of U.S. housing markets showing consistent improvement in three key measures of strength expanded by 22 in November to a total of 125, according to the National Association of Home Builders/First American Improving Markets Index (IMI), released today.  This marks a third consecutive monthly gain for the index, which now includes representatives from across 38 states as well as the District of Columbia.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in November include such geographically diverse locations as San Diego, Calif.; Gainesville, Fla.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.

“Not only did 22 additional markets qualify for the improving list in November, but the geographic distribution of included metros expanded from 33 states to 38 (plus the District of Columbia), while 97 out of 103 markets retained their spots on the list from the previous month,” observed Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This shows that a housing recovery is firmly taking root and helping generate needed jobs and economic growth across much of the country — though we know that this expansion could be even stronger were it not for ongoing challenges including overly tight lending conditions and difficult appraisals.”

“The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year,” noted NAHB Chief Economist David Crowe. “Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index.”

“This new high point for the Improving Markets Index provides the latest evidence that housing has turned a corner due to rising demand from consumers who are increasingly confident about the direction of local home values,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.

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Builders accept entries for Green Awards

Posted on October 3, 2012 by Jeff Widmer

The National Association of Home Builders (NAHB) is accepting submissions for its 2013 NAHBGreen Awards. Each year, NAHB recognizes individuals, companies and organizations for excellence in residential green design and construction practices and for green building program and advocacy efforts.

This year, the award winners will be revealed to an even wider audience than in past years, with the awards being announced on Jan. 23 in conjunction with the 2013 International Builders’ Show in Las Vegas.

“The NAHBGreen Awards showcase the best and most innovative work in green,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “This is an excellent opportunity for industry professionals to be recognized for their hard work.”

The awards are open to both NAHB members and non-NAHB members. To be eligible for the Green Project of the Year categories, projects must have been started no earlier than January 2010 and substantially completed by December 2012.

Categories include: Project of the Year–Single Family, Project of the Year–Multifamily, Project of the Year–Remodel, Project of the Year–Site Development, and Advocate of the Year.

All homes and developments must be scored to the ICC-700 National Green Building Standard, to ensure fair comparisons for judging purposes. This can be done by using the online Green Scoring Tool.

All entries must be received by Oct. 18, 2012. Application fees are $250 for Project of the Year categories and $150 for the Advocate of the Year award.

For more information, or to apply, please visit the builders’ website.

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KBIS calls for speakers

Posted on September 26, 2012 by Jeff Widmer

The National Kitchen & Bath Association wants to hear from experts as potential presenters in the first-ever Voices from the Industry Conference Session Series, set to launch at KBIS 2013 in New Orleans.

The series will consist of 70 conference speakers that represent all industry segments and every level of professional. The NKBA is looking for industry-relevant topics to be presented by those experts to address the topics that are relevant to today’s kitchen and bath professional.

All applications are due no later than November 2, 2012. Selected applicants will be notified by the end of December 2012, and should be prepared to speak at the 2013 Kitchen and Bath Industry Show, April 19 -21 in New Orleans.

For complete details, such as conference policies, selection criteria, and content requirements, click here.

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Realtors: relax lending standards to boost economy

Posted on September 20, 2012 by Jeff Widmer

New survey findings, combined with an analysis of historic credit scores and loan performance, show home sales could be notably higher by returning to reasonably safe and sound lending standards, which also would create new jobs, according to the National Association of Realtors®.

Lawrence Yun, NAR chief economist, said there would be enormous benefits to the U.S. economy if mortgage lending conditions return to normal. “Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year,” he said. “The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact.”

A monthly survey of Realtors® shows widespread concern over unreasonably tight credit conditions for residential mortgages. Respondents indicate that tight conditions are continuing, lenders are taking too long in approving applications, and that the information lenders require from borrowers is excessive. Some respondents expressed frustration that lenders appear to be focusing only on loans to individuals with the highest credit scores.
Even though profits in the financial industry have climbed back strongly to pre-recession levels, lending standards still remain unreasonably tight.

Yun said all it takes is a willingness to recognize that market conditions have turned in the wake of an over-correction in home prices, with all of the price measures now showing sustained gains. “There is an unnecessarily high level of risk aversion among mortgage lenders and regulators, although many are sitting on large volumes of cash which could go a long way toward speeding our economic recovery. A loosening of the overly restrictive lending standards is very much in order,” he said.

Respondents to the NAR survey report that 53 percent of loans in August went to borrowers with credit scores above 740. In comparison, only 41 percent of loans backed by Fannie Mae had FICO scores above 740 during the 2001 to 2004 time period, while 43 percent of Freddie Mac-backed loans were above 740.

In 2011, about 75 percent of total loans purchased by Fannie Mae and Freddie Mac, which are now a smaller market share, had credit scores of 740 or above.

There is a similar pattern for FHA loans. The Office of the Comptroller of the Currency has defined a prime loan as having a FICO score of 660 and above. However, the average FICO score for denied applications on FHA loans was 669 in May of this year, well above the 656 average for loans actually originated in 2001.

Loan performance over the past decade shows the 12-month default rate averaged just under 0.4 percent of mortgages in 2002 and 2003, which is considered normal. Twelve-month default rates peaked in 2007 at 3.0 percent for Fannie Mae loans and 2.5 percent for Freddie Mac loans, clearly showing the devastating impact of risky mortgages.
Yun said home buyers in recent years have been highly successful. Since 2009, the 12-month default rates have been abnormally low. Fannie Mae default rates have averaged 0.2 percent while Freddie Mac’s averaged 0.1 percent, which are notable given higher unemployment in the time frame.

Under normal conditions, existing-home sales should be in the range of 5.0 to 5.5 million. “Sales this year are projected to rise 8 to 10 percent. Although welcoming, this still represents a sub-par performance of about 4.6 million sales,” Yun said. “These findings show we need to return to the sound underwriting standards that existed before the aberrations of the housing boom and bust cycle, and thoroughly re-examine current and impending regulatory rules that may cause excessively tight standards.”

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