The Nail, May 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.

of State Session event

host local representatives Register today to attend the "End of State Session Celebration" May 9th 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).

A Taste of Torciano

The James Hardie Building Products Taste of Torciano wine tasting event returned to Travellers Rest last month.

New home sales post solid gains in March

Despite higher interest rates last month, new home sales rose in March due to limited inventory of existing homes. However, the pace of new home sales will be under pressure in April as mortgage rates moved above 7% this month, which is expected to moderate sales and increase the use of builder sales incentives this spring.

Sales of newly built, single-family homes in March rose 8.8% to a 693,000 seasonally adjusted annual rate from a downwardly revised reading in February, 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 March is up 8.3% from a year earlier.

“Although consumer demand has been somewhat dampened due to higher interest rates, builders continue to supply new homes to the market to lift inventory to make up for the low resale supply,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “Rates moving above 7% however, will move some home buyers to the sidelines as the spring progresses.”

“Shelter inflation remains the largest, lingering obstacle to lower inflation,” said NAHB Chief Economist Robert Dietz. “More housing supply will ultimately tame shelter inflation

growth and lower interest rates. This will improve the cost of financing for land developers and home builders and enable more attainable housing supply.”

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 March reading of 693,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in March remained elevated at a level of 477,000, up 2.6% from February. This represents an 8.3 months’ supply at the current building pace, which has been supported by the ongoing shortage of resale homes. Data from the National Association of Realtors indicate just a 3.1 months’ supply of existing single-family homes in March, with a balanced market holding 5 to 6 months’ supply. Inventory of newly-built single-family homes is up 10.2% on a year-over-year basis.

The median new home sale price in March was $430,700, up nearly 6% from February, and down 1.9% compared to a year ago.

Regionally, on a year-to-date basis, new home sales are up 15.1% in the Northeast, 17.8% in the Midwest and 28.1% in the West. New home sales are down 6.6% in the South.. n

Housing starts fall on interest rate concerns

Housing starts fell in March with interest rates somewhat higher than expected last month as the latest inflation readings failed to show improvement. Builders are also still facing higher supply-side costs and tighter lending conditions.

Overall housing starts decreased 14.7% in March to a seasonally adjusted annual rate of 1.32 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The March reading of 1.32 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months.

“Builders are grappling on several fronts as the inflation fight continues,” said Carl Harris, NAHB chairman. “Higher interest rates are increasing the cost of housing for

prospective home buyers and raising the development and construction cost for builders of homes and apartments. At the same time, shelter inflation is rising faster than overall prices due to supply-side challenges.”

“Single-family starts were down in March as interest rates increased and multifamily production fell as builders faced tighter financing conditions,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “And with single-family permits also down in March, single-family production will likely decline again in April.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 21.7% lower in the Northeast, 6.0% higher in the Midwest, 0.4% lower in the South and 14.0% higher in the West.

Builder sentiment unchanged in April

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 sentiment was flat in April as mortgage rates remained close to 7% over the past month and the latest inflation data failed to show improvement during the first quarter of 2024.

Builder confidence in the market for newly built single-family homes was 51 in April, unchanged from March, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today. This breaks a four-month period of gains for the index, which nonetheless remains above the key breakeven point of 50.

“With many frustrated buyers back on the fence waiting for interest rates to fall, policymakers can help ease affordability challenges by reducing inefficient regulatory rules that raise housing costs and limit supply,” said NAHB Chairman Carl Harris.

“April’s flat reading suggests potential

for demand growth is there, but buyers are hesitating until they can better gauge where interest rates are headed,” said NAHB Chief Economist Robert Dietz. “With the markets now adjusting to rates being somewhat higher due to recent inflation readings, we still anticipate the Federal Reserve will announce future rate cuts later this year, and that mortgage rates will moderate in the second half of 2024.”

The April HMI survey also revealed that 22% of builders cut home prices this month, down from 24% in March and 36% in December 2023. However, the average price

Overall permits decreased 4.3% to a 1.46 million unit annualized rate in March. Single-family permits decreased 5.7% to a 973,000 unit rate. Multifamily permits decreased 1.2% to an annualized 485,000 pace.

Looking at regional data on a year-to-date basis, permits are 34.5% higher in the Northeast, 11.3% higher in the Midwest, 0.9% lower in the South and 1.0% higher in the West.

The number of single-family homes under construction totaled 689,000 in March, down 2.7% from a year ago. The number of apartments under construction totaled 957,000 in March, down 1.6% from a year ago.

While apartment construction starts are down, the number of completed units entering the market is rising due to prior elevated construction levels. The pace of completions for apartments in buildings with five or more units is up 27.4% for the first quarter of 2024 compared to the first quarter of 2023. A higher pace of completions in 2024 for multifamily construction will place some downward pressure on rent growth n

reduction in April held steady at 6% for the 10th straight month. Meanwhile, the use of sales incentives ticked down to 57% in April from a reading of 60% in March.

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.

The HMI index charting current sales conditions in April increased one point to 57 and the component gauging traffic of prospective buyers also edged one point higher to 35. The component measuring sales expectations in the next six months fell two points to 60.

Looking at the three-month moving averages for regional HMI scores, the Northeast increased four points to 63, the Midwest gained five points to 46, the South rose one point to 51 and the West registered a fourpoint gain to 47. n

A Taste of Torciano at Travellers Rest!

The James Hardie Building Products wine tasting event returned to Travellers Rest in Nashville last month. The wine tasting event provides members a chance to taste some of Italy’s finest wines paired with palate-pleasing hors d’oeurvres and dinner selections. Proceeds from the evening benefit the Home Builders’ PAC.

A big thanks to our title sponsor, James Hardie Building Products, and to all of our event sponsors: Brightland Homes, Builders Mutual, Eclipse Construction Group, EuroStone, Ferguson, Metro Carpets, Ole South Properties, TimberTown, Tolbert Marketing & Events, Tune, Entrekin & White, United Communications, and Wesley Mortgage. n

SPIKE REPORT

Twenty-five 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 March 31, 2024.

MAY 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, June 20th Habitat for Humanity Restore Store

Topic: Membership Mixer! More details coming soon! 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, MAY 2ND

Topic: Selling Your Homes in a Multicultural Market: a Roundtable Discussion with Sales Experts. SMC Members Free thanks to US Bank! Non-SMC members: $15 with RSVP; $20 w/o RSVP RSVP to: cnicley@hbamt.org