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.
Consumer confidence weakened in June on economic concerns, but remained within the range of the past two years on the strength of optimism in labor market conditions.
James Hardie Golf Tournament this August
The HBAMT’s Annual Golf Tournament returns this August to the Towhee Club in Spring Hill. Sign up now to participate in the big event as a player or a sponsor and join us on the course. Players registration on page 11; sponsors registration page twelve.
Mortgage rates put damper on new home sales in May
Mortgage rates that averaged 7.06% in May per Freddie Mac, the highest monthly average since last November, put a damper on new home sales last month.
Sales of newly built, single-family homes in May fell 11.3% to a 619,000 seasonally adjusted annual rate from a sharp upwardly revised reading in April, 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 May is down 16.5% from a year earlier and is the lowest pace since November 2023.
“Persistently high mortgage rates in May kept many prospective buyers on the sidelines,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “However, significant unmet demand exists, and we expect mortgage rates to moderate in the coming months, which will bring more buyers into the market.”
We expect mortgage rates to moderate in the coming months, which will bring more buyers into the market.
“While new home inventory increased to a 9.3 months’ supply, due to a lack of resale homes for sale, the combined inventory for new and existing single-family homes remains lean at a 4.4 months’ supply according to NAHB estimates,” said NAHB Chief Economist Robert Dietz.
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 May reading of 619,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in May remained elevated at a level of 481,000, up 12.9% compared to a year earlier. This represents an 9.3 months’ supply at the current building pace, which has been supported by the ongoing shortage of resale homes.
Due to declines in new home size and some builder use of incentives, the median new home price fell to $417,400, down almost 1% from a year ago.
Regionally, on a year-to-date basis, new home sales are up 6.0% in the Northeast, 25.2% in the Midwest and 6.3% in the West. New home sales are down 7.6% in the South. n
Single-family and multifamily housing starts fall in May
Single-family and multifamily housing starts fell in May as high interest rates for construction and development loans and mortgage rates held back both housing supply and demand.
Overall housing starts fell 5.5% in May to a seasonally adjusted annual rate of 1.28 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The May reading of 1.28 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 5.2% to a 982,00 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 18.8%, albeit off weak early 2023 data. The multifamily sector, which includes apartment buildings and condos, declined 6.6% to an annualized 295,000 pace. This is the lowest pace for apartment construction since April 2020.
“Overall lower housing production correspond with our latest industry surveys, which
show builders are concerned with a high interest environment that is making it harder to get acquisition, development and construction loans to increase home building activity,” said Carl Harris, NAHB chairman. “Higher rates for builder and developer loans, along with ongoing supply-side challenges regarding construction labor and buildable lots, are acting as headwinds for new home and apartment construction.”
On the demand side, mortgage rates averaged 7.06% in May per Freddie Mac, the highest reading since November 2023. This high interest rate environment is causing many potential buyers to remain on the sidelines.
“It is not just the single-family market that is experiencing challenges. The three-month moving average for multifamily starts is the lowest since the fall of 2013 as the multifamily development deceleration continues,” said NAHB Chief Economist Robert Dietz.
The ratio of multifamily completions to starts (the total number of apartments completing construction compared to those start-
High mortgage rates act as a drag on builder confidence
Mortgage rates that continue to hover in the 7% range along with elevated construction financing costs continue to put a damper on builder sentiment.
Builder confidence in the market for newly built single-family homes was 43 in June, down two points from May, according to the NAHB)/Wells Fargo Housing Market Index (HMI).
“Persistently high mortgage rates are keeping many prospective buyers on the sidelines,” said NAHB Chairman Carl Harris. “Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages and a dearth of buildable lots.”
“We are in an unusual situation because a lack of progress on reducing shelter inflation, which is currently running at a 5.4% year-over-year rate, is making it difficult for the Federal Reserve to achieve its target in-
flation rate of 2%,” said NAHB Chief Economist Robert Dietz. “The best way to bring down shelter inflation and push the overall inflation rate down to the 2% range is to increase the nation’s housing supply. A more favorable interest rate environment for construction and development loans would help to achieve this aim.”
The June HMI survey also revealed that 29% of builders cut home prices to bolster sales in June, the highest share since January 2024 (31%) and well above the May rate of 25%. However, the average price reduction in June held steady at 6% for the 12th straight month. Meanwhile, the use of sales incentives ticked up to 61% in June from a reading of 59% in May. This metric is at its highest share since January 2024 (62%).
Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gaug-
ing construction) was 1.8 in May, tied with April for the highest ratio since Covid. “This ratio was 0.6 in April 2022 when many more apartments were starting construction compared to finishing construction, demonstrating the significant reversal for the multifamily construction pipeline,” said Dietz.
The number of apartments under construction is now down to 914,000, the lowest count since Sept 2022 and down 11% since the peak rate in July 2023.
On a regional and year-to-date basis, combined single-family and multifamily starts are 22.2% lower in the Northeast, 8.0% lower in the Midwest, 2.3% lower in the South and 2.6% higher in the West. Declines for multifamily construction are driving the weakness for those regions showing year-to-date total housing starts declines.
Overall permits decreased 3.8% to a 1.39-million-unit annualized rate in May. Single-family permits decreased 2.9% to a 949,000 unit rate; this is the lowest pace since June 2023. Multifamily permits decreased 5.6% to an annualized 437,000 pace.
Looking at regional data on a year-to-date basis, permits are 0.7% higher in the Northeast, 5.3% higher in the Midwest, 0.8% higher in the South and 1.5% lower in the West. n
es 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 HMI component indices posted declines in June and all are below the key threshold of 50 for the first time since December 2023. The HMI index charting current sales conditions in June fell three points to 48, the component measuring sales expectations in the next six months fell four points to 47 and the gauge charting traffic of prospective buyers declined two points to 28.
Looking at the three-month moving averages for regional HMI scores, the Northeast held steady at 62, the Midwest dropped three points to 47, the South decreased three points to 46 and the West posted a two-point decline to 41 n
Consumer confidence edges lower
Consumer confidence weakened in June but remained within the range of the past two years, with optimism about current labor market conditions offsetting concerns about future economic outlook. However, higher interest rates and lingering inflation continue to discourage consumption.
The Consumer Confidence Index fell from 101.3 to 100.4 in June. The Present Situation Index rose 0.7 points from 140.8 to 141.5, while the Expectation Situation Index fell 1.9 points from 74.9 to 73. Historically, an Expectation Situation Index reading below 80 often signals a recession within a year.
Consumers’ assessment of current business conditions fell slightly in June. The share of respondents rating business conditions “good” decreased by 1.2 percentage points to 19.6%, while those claiming business conditions as “bad” fell by 0.7 percentage points to 17.7%. Meanwhile, consumers’ assessments of the labor market were more positive. The share of respondents reporting that jobs were “plentiful” increased by 1.1 percentage points, while those who saw jobs as “hard to get” fell by 0.2 percentage points.
Consumers were less pessimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 13.7% to 12.5%, while those expecting business conditions to deteriorate decreased from 16.9% to 16.7%. Similarly, expectations of employment over the next six months were less favorable. The share of respondents expecting “more jobs” decreased by 0.5 percentage points to 12.6%, and those anticipating “fewer jobs” declined by 1.5 percentage points to 17.3%.
The share of respondents planning to buy a home remained unchanged at 5.2% in June. Of those, respondents planning to buy a newly constructed home fell slightly to 0.4%, and those planning to buy an existing home decreased to 2%. n
Please return your completed registration form (provided below) to the HBAMT to enter.
TEAMS
BE A MEMBER OF THE HBAMT (all teams must have at least one HBAMT member playing)
- you are registering for the afternoon round: r Afternoon Round ______ No. of players x $240.00. Add an additional $80 if you check the box below to purchase a Mulligan Packet r Check here to add $80 and purchase a Mulligan Packet for each player (each packet includes two (2) mulligans, one (1) extend-a-putt, and one (1) red tee per player on your foursome) Make checks payable to HBAMT; cc payment below* | HBAMT - 9007
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 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 May 31, 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: to be announced
SMC Members Free pending sponsorship! Non-SMC members: $15 with RSVP; $20 w/o RSVP RSVP to: cnicley@hbamt.org
