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.
James Hardie Golf Tournament sponsorships
New home sales soft in June on mortgage rates
Elevated mortgage rates continue to keep buyers on hold, as new home sales remained relatively flat in June.
Sales of newly built, single-family homes in June fell 0.6% to a 617,000 seasonally adjusted annual rate from a slight upwardly revised reading in May, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in June is down 7.4% from a year earlier and is the lowest pace since November 2023.
“Many potential buyers are remaining in a holding pattern due to elevated mortgage rates that averaged near 7% in June,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “However, moderating inflation suggests lower interest rates in the months ahead and that should bring more buyers off the sidelines.”
“Though new home inventory in June remained elevated at a 9.3 months’ supply at the current building pace, there is still a long-run need for more construction because existing inventory remains relatively low,” said Jing Fu, NAHB director of forecasting and analysis. “Due to a lack of resale homes for sale, the combined inventory for new and existing
single-family homes remains lean at a 4.7 months’ supply, according to NAHB estimates.”
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 June reading of 617,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in June remained elevated at a level of 476,000, up 11.2% compared to a year earlier. This represents a 9.3 months’ supply at the current building pace, which has been supported by the ongoing shortage of resale homes. Of the new home inventory, 102,000 are completed ready-to-occupy homes, up 50% year over year. This segment represents 21% of total inventory.
The median new home price was $417,300, up 2.5% compared to last month, and remained essentially flat compared to last year.
Regionally, on a year-to-date basis, new home sales are down 5.5% in the Northeast and 6.7% in the South. New home sales are up 25.5% in the Midwest and 5.7% in the West n
Remodeling market sentiment holds steady in second quarter
The NAHB released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter, posting a reading of 65, down one point compared to the previous quarter.
The NAHB/Westlake RMI survey asks remodelers to rate five components of the remodeling market as “good,” “fair” or “poor.” Each question is measured on a scale from 0 to 100, where an index number above 50 indicates that a higher share view conditions as good than poor.
The Current Conditions Index is an average of three components: the current market for large remodeling projects, moderately-sized projects and small projects. The Future Indicators Index is an average of two components: the current rate at which leads and inquiries are coming in and the current backlog of remodeling projects. The overall RMI is calculated by averaging the Current Conditions Index and the Future Indicators Index. Any number over 50
indicates that more remodelers view remodeling market conditions as good than poor.
“Although some remodelers are reporting a slowdown, most continue to see solid demand for remodeling projects, subject to normal seasonal fluctuations,” said NAHB Remodelers Chair Mike Pressgrove, a remodeler from Topeka, Kan. “In some markets, elevated interest rates have caused some customers to purchase improvement projects with cash rather than loans. However, this option is only available for wealthier home owners.”
“The RMI remains solidly in positive territory, and NAHB continues to project remod-
Single-family starts weaken in June
Elevated interest rates for home mortgages and construction and development loans kept single-family production and demand in check during June.
Overall housing starts increased 3.0% in June to a seasonally adjusted annual rate of 1.35 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The June reading of 1.35 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 decreased 2.2% from an upwardly revised May figure to a 980,000 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 16.1%. The volatile multifamily sector, which includes apartment buildings and condos, increased 19.6% to an annualized 373,000 pace.
“Lower single-family starts are in line with our latest builder surveys, which show
that while builders are concerned about the current high interest rate environment, they believe that mortgage rates will moderate in the coming months and lead to higher construction in the latter part of 2024,” said Carl Harris, NAHB chairman.
“With better inflation data, the Federal Reserve is expected to begin rate reductions later this year, and an improving interest rate environment will help buyers as well as builders and developers who are contending with tight lending conditions and high interest rates,” said NAHB Chief Economist Robert Dietz. “And with home inventory at a relatively low 4.4 months’ supply, builders are prepared to increase production in the months ahead. NAHB survey data of forward-looking builder sales expectations saw a gain in July.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 9.9% lower in the Northeast, 3.4% lower in the Midwest, 3.5% lower in the South and 0.7% higher in the West.
eling activity has stabilized at a healthy level in 2024,” said NAHB Chief Economist Robert Dietz. “Some home owners may be tempted to delay projects waiting for interest rates to decline, but this is offset by others who want to work with a remodeler now, fearing inflation may increase project costs if they wait.”
The Current Conditions Index averaged 73, declining one point compared to the previous quarter. All three components remained well above 50 in positive territory in the second quarter: the component measuring large remodeling projects ($50,000 or more) remained even at 70, the component measuring moderate remodeling projects (at least $20,000 but less than $50,000) remained even at 74, and the component measuring small-sized remodeling projects (under $20,000) fell two points to 75.
The Future Indicators Index averaged 58, declining one point compared to the previous quarter. The component measuring the current rate at which leads and inquiries are coming in dropped two points to 55, and the component measuring the backlog of remodeling jobs edged down one point to 60 n
Overall permits increased 3.4% to a 1.45 million unit annualized rate in June. Single-family permits decreased 2.3% to a 934,000 unit rate. Multifamily permits increased 15.6% to an annualized 512,000 pace.
Looking at regional data on a year-to-date basis, permits are 0.8% lower in the Northeast, 3.0% higher in the Midwest, 0.7% lower in the South and 3.8% lower in the West.
The total number of single-family homes and apartments under construction was 1.56 million in June. This is the lowest total since January 2022.
Single-family homes under construction fell back 1.3%, to a count of 668,000—down 2.2% from a year ago. The number of multifamily units under construction continues to fall, declining 1.6% to an 895,000 count— down 11.4% from a year ago. The number of multifamily units under construction is now the lowest since August 2022.
Multifamily completions reached a 673,000 seasonally adjusted annual rate in June. This is the fastest pace for apartment completions since May of 1986. This additional supply will provide some added relief for shelter inflation and provide confidence for the Fed to begin cutting interest rates this year. n
Building material prices impact housing
Prices of materials used in residential construction have been flat or even declined in some cases, providing welcome relief to home builders. But overall, prices of building materials are still far above pre-pandemic levels, and the impact of those elevated prices can be seen in unexpected places.
Where are Building Material Prices Now?
Earlier this year, NAHB reported that building material price growth slowed dramatically in 2023, in line with slowing inflation in the broader economy. Prices still grew, though, and were still elevated from post-pandemic surges.
“The only major building material to see price recovery is lumber,” said Jesse Wade, NAHB director of tax and trade policy analysis. “At the end of 2023, lumber was trading about 20% higher than in 2019, but with further price declines in 2024, the price is roughly back to normal. This is after surges in 2020-21 that saw lumber prices rise more than 300%.”
For other build materials categories, prices are still above pre-pandemic levels.
- Gypsum (drywall): Prices decreased 2% over 2023, after increasing 44.6% over the two years ending Dec. 2022.
- Ready-mix concrete: The average price of concrete increased 11.2% in 2023 and 10.3% in 2022, combining for the second-largest two-year increase since 2000.
- Steel mill products: Steel mill products annual average prices declined 16.1% in 2023 after increasing 8.7% in 2022 and the historic 90.3% increase of
2021. Prices are 31.2% lower than their 2021 peak but remain 65.1% higher than they were in Jan. 2020.
Why Did Building Material Prices Rise So High?
It’s easy to blame the pandemic for all our woes, and it certainly didn’t help building material prices. But material prices were pointed higher long before the first mention of COVID.
Beginning in late 2017 and continuing for most of 2018, building material prices grew more than 5%, mostly driven by trade disputes for materials sourced overseas.
- Broader inflation: When the general cost of goods and services rises across the economy, it inevitably impacts the price of construction materials.
- Global factors: Factors such as geopolitical tensions, trade disputes and changes in international trade policies can disrupt supply chains and lead to price instability.
“In the spring of 2020, supply and demand forces took over the lumber market,” said Wade, who continually tracks and analyzes short- and long-term trends in commodities pricing. “Home builders got back to work very quickly, and people stuck at home decided to invest in home repairs, renovations and upgrades. So lumber prices soared. But it wasn’t until early 2021 that other material prices began to rise.”
What Causes the Rise in Material Prices?
- Supply and demand: Although lumber was the most sensitive material to demand, other materials quickly followed, and for good reason. There were more homes started in 2020 than in 2019, even with all the lockdowns. The number of homes started in 2021 was a 15-year high. In short, there was high demand for materials in 2020 and 2021.
- Sustainability initiatives: There's a growing demand for eco-friendly, sustainable building materials and green practices in the construction industry. Although this is a positive trend for the environment, it can put pressure on costs as these specialty materials often come with a higher price tag.
How Do High Material Costs Impact Housing?
Aside from simply making it more expensive to build — and thus, buy — a home, rising material prices can have insidious effects on the housing market. Home insurance premiums have soared over the past year. One of the primary drivers of the rate increases is the cost of building materials used to repair homes after claims. Although building material prices have been growing for years, we are just starting to see the impact on the insurance market.
Material cost fluctuations also make it more difficult for appraisals to reflect the true value of the home, because costs are rising too rapidly and builders are having to compensate on the front end of construction by decreasing amenities available in the home. Inaccurate valuations can cause major issues in financing for home buyers.
At a time when mortgage rates and home prices are at multi-decade highs, the rising insurance premiums and uneven valuation environment makes housing attainability much harder. n
2024 Golf Tournament Sponsorships!
The 13th Annual HBAMT Golf Tournament is set for Thursday, August 15 at the Towhee Club in Spring Hill. Sign up now to sponsor at one of the following levels!
sponsorship level price/# available benefits selection
TITLE SPONSOR
Lunch Sponsor
Breakfast Sponsor
Platinum
Gold Sponsor
$10,000 1 available
$5,000 1 available
$3,000 1 available
$1,800 9 available
$1,200 5 available
Silver Sponsor
Hospitality Cart
Wrap-up Party Sponsor
$650
$2,500 1 available
$3,000 1 available
l Company name featured as headliner on all materials
l Booth at registration, awards wrap-up & course hole
l Opportunity to hand out promotional materials
l Signage provided
l Company name featured as Lunch Sponsor on all material
l Booth at check-in and Golf Tournament course hole
l Opportunity to hand out promotional materials
l Four (4) tickets to Wrap-up
l Company name featured as Breakfast Sponsor on all material
l Booth at check-in and Golf Tournament course hole
l Your booth will be breakfast ticket pick up point for all golfers
l Opportunity to hand out promotional materials
l Two (2) tickets to Wrap-up
l Single hole sponsor for both morning & afternoon rounds
l Opportunity to hand out promotional materials at hole
l Signage at tournament provided
l Opportunity to hand out information & goodies
l Two (2) tickets to wrap-up
l Company name featured on all materials
l Booth at wrap-up & course hole
l Opportunity to hand out promotional materials at hole
l Signage at tournament provided
l Two (2) tickets to wrap-up
l Hole sponsor for both morning & afternoon rounds
l Opportunity to hand out promotional materials at hole
l Two (2) tickets to wrap-up
l Hospitality cart with your name on it
l Opportunity to ride cart in morning & afternoon rounds moving freely within the course handing out beverages & goodies
l Company name featured as Wrap-up Sponsor on all material
l Booth at check-in and Golf Tournament course hole
l Opportunity to hand out promotional materials
l Two (2) tickets to Breakfast
Indicate which of the four (4) sponsorship levels shown above you selected and return the completed form below to the HBAMT to sign up today! (List company EXACTLY as you want it to appear on signage.)
SPIKE REPORT
Twenty-two SPIKES (in bold) increased their recruitment numbers last month. What is a SPIKE? SPIKES recruit new members and help the association retain members. Here is the latest SPIKE report as of June 30, 2024.
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: to be announced. Free with RSVP pending sponsorship. 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. Next meeting: THURSDAY, AUGUST 1ST
Topic: " New NAR Rules & Regulations," with Debra Beagle, CRS, CEO/Managing Broker/Owner of The Ashton Real Estate Group of RE/MAX Advantage in Nashville. SMC Members Free thanks to Barlow Builders and Tolbert Marketing & Events!
Non-SMC members: $20 with RSVP; $25 w/o RSVP RSVP to: cnicley@hbamt.org
