The Nail, April 2024

THE NAIL

The official magazine of Home Builders Association of Middle Tennessee

President

Jim Hysen

Vice President

Kelly Beasley

Secretary/Treasurer

Eli Routh

Executive Vice President

John Sheley

Editor and Designer

Jim Argo

Staff

Connie Nicley

Kim Grayson

THE NAIL is published monthly by the Home Builders Association of Middle Tennessee, a non-profit trade association dedicated to promoting the American dream of homeownership to all residents of Middle Tennessee.

SUBMISSIONS: THE NAIL welcomes manuscripts and photos related to the Middle Tennessee housing industry for publication. Editor reserves the right to edit due to content and space limitations.

POSTMASTER: Please send address changes to: HBAMT, 9007 Overlook Boulevard, Brentwood, TN 37027. Phone: (615) 377-1055.

FEATURES

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End of State Session event to host local representatives Register today to attend the "End of State Session Celebration" May9th in Franklin! Mix & Mingle with your local representatives and fellow members while supporting the association's local legislative efforts. (Proceeds benefit HI-PAC; payments must be made by check payable to Hi_PAC).

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Single-family permits see strong rebound in 2024

Over the first month of 2024, the total number of single-family permits issued year-to-date (YTD) nationwide increased by nearly 44% over the level in January, 2023. DEPARTMENTS

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SPIKE Club Report

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April Calendar

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Chapters and Councils ON

Single-family permits see rebound gain in first month of 2024. See page 9 (nine) for more details.

New home sales hold steady in February

Asmall rise in mortgage rates in February led to a flat reading for new home sales

Sales of newly built, single-family homes in February edged 0.3% lower to a 662,000 seasonally adjusted annual rate, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in February is up 5.9% from a year earlier.

“While new home sales remained flat in February, our latest home builder surveys show increased levels of confidence driven by the ongoing lean levels of existing home inventory,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “As interest rates subside over the course of 2024, additional home buyers will be priced into the market and new construction will be needed to meet this demand.”

“A slight uptick in mortgage rates held back the pace of new home sales in February,” said NAHB Chief Economist Robert Dietz. “Our latest builder surveys show that roughly one-quarter of builders reported cutting home prices in March. The price cuts, in combination with building slightly smaller homes, can be seen in

today’s data that show a 7.6% year-over-year decline for median new home prices.”

Mortgage rates averaged 6.78% in February compared to 6.64% in January, according to Freddie Mac.

A new home sale occurs when a sales contract is signed, or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the February reading of 662,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in February remained elevated at a level of 463,000, up 1.3% from January. This represents an 8.4 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. However, with only a 2.9 months’ supply of existing homes for sale, new home inventory can remain above this balanced measure.

The median new home sale price in February was $400,500, edging down 3.5% from January, and down 7.6% compared to a year ago.

Regionally, on a year-to-date basis, new home sales are up 47.0% in the Northeast, 29.7% in the Midwest and 41.0% in the West. New home sales are down 13.4% in the South n

Builder sentiment rises above break even point

Alack of existing inventory that continues to drive buyers to new home construction, coupled with strong demand and mortgage rates below last fall’s cycle peak helped push builder sentiment above a key marker in March.

Builder confidence in the market for newly built single-family homes climbed three points to 51 in March, according to the NAHB/Wells Fargo Housing Market Index (HMI) released recently. This is the highest level since July 2023 and marks the fourth consecutive monthly gain for the index. It is also the first time that the sentiment level has surpassed the breakeven point of 50 since last July.

“Buyer demand remains brisk and we expect more consumers to jump off the sidelines and into the marketplace if mortgage rates continue to fall later this year,” said NAHB Chairman Carl Harris. “But even though there is strong pent-up demand, builders continue to face several supply-side challenges, including a scarcity of buildable

lots and skilled labor, and new restrictive codes that continue to increase the cost of building homes.”

“With the Federal Reserve expected to announce future rate cuts in the second half of 2024, lower financing costs will draw many prospective buyers into the market,” said NAHB Chief Economist Robert Dietz. “However, as home building activity picks up, builders will likely grapple with rising material prices, particularly for lumber.”

With mortgage rates below 7% since mid-December per Freddie Mac, more builders are cutting back on reducing home prices to boost sales. In March, 24% of builders reported cutting home prices, down from 36% in December 2023 and the lowest share since July 2023. However, the average price reduction in March held steady at 6% for the ninth straight month. Meanwhile, the use of sales incentives is holding firm. The share of builders offering some form of incentive in March was 60%, and this has remained between 58% and 62% since last

Single family starts pushed to highest level in two years

Pent-up demand, moderating interest rates and a lack of existing inventory helped push single-family starts in February to their highest level since April 2022.

Overall housing starts increased 10.7% in February to a seasonally adjusted annual rate of 1.52 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The February reading of 1.52 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 11.6% to a 1.13 million seasonally adjusted annual rate. Single-family starts are also up 35.2% compared to a year ago. The multifamily sector, which includes apartment buildings and condos, increased 8.3% to an annualized 392,000 pace.

“The solid level of single-family production in February tracks closely with rising

builder sentiment, and with mortgage rates expected to moderate further this year, this will provide an added boost for single-family building,” said Carl Harris, NAHB chairman. “But policymakers need to help the industry's supply-chains in order to protect housing affordability and add much needed supply to boost inventory.”

“Single-family housing is poised for a good year in 2024 with starts and permits on an upward trend,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice presi-

September.

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI 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 for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three of the major HMI indices posted gains in March. The HMI index charting current sales conditions increased four points to 56, the component measuring sales expectations in the next six months rose two points to 62 and the component gauging traffic of prospective buyers increased two points to 34.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased two points to 59, the Midwest gained five points to 41, the South rose four points to 50 and the West registered a fivepoint gain to 43 n

dent for forecasting and analysis. “The uptick in single-family permits is good news for the industry, which was hit hard by tight monetary policy last year. However, builders still face several supply-side challenges in the form of shortages and higher prices for buildable lots and labor.”

On a regional basis compared to the previous month, combined single-family and multifamily starts are 10.3% lower in the Northeast, 50.7% higher in the Midwest, 15.7% higher in the South and 7.9% lower in the West.

Overall permits increased 1.9% to a 1.52 million unit annualized rate in February. Single-family permits increased 1.0% to a 1.03 million unit rate. Multifamily permits increased 4.1% to an annualized 487,000 pace.

Looking at regional permit data compared to the previous month, permits are 36.2% higher in the Northeast, 3.8% higher in the Midwest, 1.3% lower in the South and 6.8% lower in the West.

The number of apartments under construction fell to 983,000 in February, while the number of single-family homes under construction stood at 683,000 n

Strong rebound in single-family permits at the start of 2024

While higher interest rates pushed single-family starts down in 2022 and 2023, production should move on a gradual upward path in 2024 as the Federal Reserve is on track to cut rates during the second half of the year with inflation slowing, according to economists speaking at the National Association of Home Builders (NAHB) International Builders’ Show in Las Vegas in February.

In January 2024, the total number of single-family permits issued year to date (YTD) nationwide reached 75,906 — an increase of 43.1% over the January 2023 level of 53,062.

Single-family permits were up in all four

regions in January. Permit increases spanned from 67% in the West to 19.4% in the Northeast. The South was up by 39.4%, and the Midwest was up by 36.5%.

For multifamily permits, the regions were split, with half posting increases and the other posting decreases. The Northeast was up by 64.5%, and the Midwest was up by 13.6%. The South posted a decline of 32.5%, and the West declined by 27.9% in multifamily permits during this time.

Forty-four states posted an increase in single-family permits in January 2024 compared to January 2023. Increases ranged from 128% in Nevada to 2.4% in Mississippi. The 10 states issuing the highest number of single-family permits combined account-

ed for 67.7% of the total single-family permits issued.

The total number of multifamily permits issued nationwide reached 38,870 YTD ending in January. This is 18.9% below the January 2023 level of 47,936.

Twenty-one 21 states recorded growth in multifamily permits in January 2024 compared to January 2023, while 29 states and the District of Columbia recorded a decline. Wyoming had a sharp rise in multifamily permits from nine to 43 (+377.8%), while Alaska had the greatest decline from 54 to zero. The 10 states issuing the highest number of multifamily permits combined accounted for 68.1% of the multifamily permits issued. n

APRIL CALENDAR

CHAPTERS & COUNCILS

CHAPTERS

CHEATHAM COUNTY CHAPTER

Chapter President - Roy Miles Cheatham County Chapter details are being planned.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

DICKSON COUNTY CHAPTER

Chapter President - Mark Denney Dickson County Chapter details are currently being planned.

Next meeting: to be announced.

Price: FREE, lunch dutch treat.

RSVP to: cnicley@hbamt.org

MAURY COUNTY CHAPTER

Chapter President - Lisa Underwood Maury County Chapter details are currently being planned.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

METRO/NASHVILLE CHAPTER

Chapter President - Tonya Esquibel Metro/Nashville Chapter details are currently being planned.

Next meeting: to be announced.

Topic: to be announced.

RSVP to: cnicley@hbamt.org

ROBERTSON COUNTY CHAPTER

Robertson County Chapter details are currently being planned.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

SUMNER COUNTY CHAPTER

Chapter President - Joe Dalton

The Sumner County Chapter typically meets at the new Hendersonville Library. Future meetings to be announced.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

WILLIAMSON COUNTY CHAPTER

Chapter President - Christina James Williamson County Chapter details are being planned.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

WILSON COUNTY CHAPTER

Chapter President - Margaret Tolbert

Next meeting: Thursday, April 11th, 11:30 a.m.

Middle Tennessee Electric - 201 Maddox-Simpson Pkwy., (side entrance) Lebanon, TN 37029

Topic: Join the Wilson County Chapter April 11th at Middle Tennessee Electric in Lebanon and learn how to "Turn Prospects into Paychecks"!

Free with RSVP.

RSVP to: cnicley@hbamt.org

COUNCILS

HBAMT REMODELERS COUNCIL

The HBAMT Remodelers Council meets at varying locations throughout the year.

Next meeting: to be announced.

RSVP to: cnicley@hbamt.org

INFILL BUILDERS COUNCIL

Infill Builders Council details are currently being planned.

Next meeting: to be announced.

MIDDLE TENN SALES & MARKETING COUNCIL

Council President - Beth Lewis

The SMC typically meets on the first Thursday of the month, 9:00 a.m. at the HBAMT offices.

Next meeting: THURSDAY, APRIL 4TH

Topic: Mortgage Training: a Roundtable Discussion with Lending Experts. Insider tips, insights, and best practices for securing the best mortgages for your properties and homes. SMC Members Free thanks to Legacy South!

Non-SMC members: $15 with RSVP; $20 w/o RSVP RSVP to: cnicley@hbamt.org