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.
A lack of resale homes and pent-up demand more than offset high mortgage rates and contributed to solid single-family permit growth across nearly all geographic regions in the second quarter.
Sales of new homes rise unexpectedly in July
Sales of new homes rose unexpectedly in July, following significant revisions in the previous months’ data.
Sales of newly built, single-family homes in July rose 10.6% to a 739,000 seasonally adjusted annual rate from significant upward revisions in June, 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 July is up 5.6% from a year earlier. After the notably higher revisions for the May and June data, new home sales from January through July of 2024 are up 2.6% in 2024 compared to the same period in 2023.
“Despite the monthly bump in new home sales data, higher rates continue to sideline buyers as housing affordability challenges remain,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kan. “The only sustainable way to ease high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
“While mortgage rates moved lower in July, the Census estimated gains for new home sales do not match recent industry survey data including the NAHB/Wells Fargo Housing Market Index which showed weakness in the current sales index,” said NAHB Chief Economist Robert Dietz. “The Census estimate of new home sales is often volatile
and subject to revisions and it is possible that the July estimate for sales will be revised lower next month. NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower.”
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 July reading of 739,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in July ticked lower to a level of 462,000, down 1.1% from the previous month. This represents a 7.5 months’ supply at the current building pace. While this reduced level of months’ supply is above the commonly used balance measure of 6, the measure of total home inventory is lower. Given a lean level of resale inventory, total home inventory (new and existing) is near 4.5, which remains low.
The median new home price was $429,800, up 3.1% compared to last month, and a 1.4% decrease from this time last year. Regionally, on a year-to-date basis, new home sales are up 5.4% in the Northeast, 22.1% in the Midwest and 6.1% in the West. New home sales are down 2.4% in the South. n
Overall housing starts decrease in June
High interest rates for construction and development loans as well as ongoing challenges regarding labor shortages and higher prices for many building materials continued to slow the building market this summer.
Overall housing starts decreased 6.8% in July to a seasonally adjusted annual rate of 1.24 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the lowest pace since May 2020.
The July reading of 1.24 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 14.1% from an upwardly revised June figure to an 851,000 seasonally adjusted annual rate. However, on a year-to-date basis, single-family starts are up 11.4%. The multifamily sector, which includes apartment buildings and condos, increased 14.5% to an annualized 387,000 pace.
“The decline in new home construction
mirrors our latest builder surveys, which show that buyers remain concerned about challenging affordability conditions and builders are grappling with elevated rates for builder loans, a shortage of workers and lots, and supply chain concerns for some building materials,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and custom home builder from Wichita, Kan.
Builder confidence moves lower as market waits for rate cuts
Alack of affordability and buyer hesitation stemming from elevated interest rates and high home prices contributed to a decline in builder sentiment in August.
Builder confidence in the market for newly built single-family homes was 39 in August, down two points from a downwardly revised reading of 41 in July, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today. This is the lowest reading since December 2023.
“Challenging housing affordability conditions remain the top concern for prospective home buyers in the current reading of the HMI, as both present sales and traffic readings showed weakness,” said NAHB Chairman Carl Harris. “The only sustainable way to effectively tame high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
Almost three-quarters of the responses to
the August HMI were collected during the first week of the month when interest rates averaged 6.73%, according to Freddie Mac. Mortgage rates declined notably the following week to 6.47%, the lowest reading since May 2023.
“With current inflation data pointing to interest rate cuts from the Federal Reserve and mortgage rates down markedly in the second week of August, buyer interest and builder sentiment should improve in the months ahead,” said NAHB Chief Economist Robert Dietz.
The August HMI survey also revealed that 33% of builders cut home prices to bolster sales in August, above the July rate of 31% and the highest share in all of 2024. However, the average price reduction in August held steady at 6% for the 14th straight month. Meanwhile, the use of sales incentives increased to 64% in August from 61% in July, and this was the highest level since
“Better inflation data points to the Federal Reserve moving to cut interest rates possibly as early as September, and with interest rates expected to moderate in the months ahead, this will help both buyers and builders who are dealing with tight lending conditions,” said NAHB Chief Economist Robert Dietz.
On a regional and year-to-date basis, combined single-family and multifamily starts are 1.3% lower in the Northeast, 5.1% lower in the Midwest, 5.4% lower in the South and 5.1% lower in the West.
Overall permits decreased 4.0% to a 1.40 million unit annualized rate in July. Single-family permits decreased 0.1% to a 938,000 unit rate. Multifamily permits decreased 11.1% to an annualized 458,000 pace.
Looking at regional data on a year-to-date basis, permits are 1.1% higher in the Northeast, 3.2% higher in the Midwest, 0.3% lower in the South and 4.1% lower in the West.
Single-family homes under construction fell back to a count of 653,000—down 4.1% compared to a year ago. The number of multifamily units under construction fell to an 886,000 count—down 13.2% compared to a year ago. The number of multifamily units under construction is now the lowest since July 2022 n
April 2019.
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 August fell two points to 44 and the gauge charting traffic of prospective buyers also declined by two points to 25. The component measuring sales expectations in the next six months increased one point to 49.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell four points to 52, the Midwest dropped four points to 39, the South decreased two points to 42 and the West held steady at 37 n
Single-family output up across all regions
Alack of resale homes and pent-up demand more than offset high mortgage rates and contributed to solid single-family permit growth across nearly all geographic regions in the second quarter. However, multifamily construction permit activity continued its slide downward across the board to start 2024. Meanwhile, single-family and multifamily construction both exhibited strong growth in second home markets over the past decade, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the second quarter of 2024.
“Despite the elevated interest rate environment, single-family construction continues to move along at a better pace than 2023 and has been led by a rebound in construction activity in high density areas,” said NAHB Chairman Carl Harris. “Multifamily construction continues to slow as builders deal with higher rates, a shortage of workers and supply chain concerns for some building materials.”
“The strength in single-family construction at the start of the year continued in higher density areas, matching other data indicating a gain for townhouse construction at the start of 2024,” said NAHB Chief Economist Robert Dietz. “New data on second homes points to most housing construction taking place in areas with fewer second homes, as most second family homes are located in less urban areas such as non-metro counties.”
The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural geographies.
The single-family permit growth rates
for all of the HBGI geographic regions were positive in the second quarter, with five of the seven posting double-digit gains. Large metro core counties had the highest growth rate for the second straight quarter at 17.6%. Micro counties had the smallest growth rate, posting a 3.4% gain.
Large metro core counties are primarily suburban areas, and this high rate of single-family permit activity is an indication that telework is a still a factor and people are moving to more affordable areas.
Breaking down the nation’s seven metro and county areas, the second quarter HBGI shows the following market shares for single-family home building:
- 16.1% in large metro core counties
- 25.0% in large metro suburban counties
- 9.4% in large metro outlying counties
- 28.9% in small metro core counties
- 9.9% in small metro outlying areas
- 6.4% in micro counties
- 4.3% in non-metro/micro counties
All seven HBGI geographic regions posted negative multifamily permit rates in the second quarter because financing remained tight and high levels of construction inventory of just under 900,000 units is limiting the need for new multifamily permits. This weakness is consistent with the NAHB Multifamily Production Index, which had a second
quarter reading of just 44, marking a year-over-year decrease of 12 points.
The second quarter HBGI shows the following market shares for multifamily home building:
- 40.1% in large metro core counties
- 25.3% in large metro suburban counties
- 3.5% in large metro outlying counties
- 22.8% in small metro core counties
- 4.1% in small metro outlying areas
- 3.0% in micro counties
- 1.1% in non-metro/micro counties
Second Homes
Using the latest government data on second homes, the HBGI found that 17.5% of single-family home construction and 8.6% of multifamily development occurred in second home areas during the second quarter of 2024. NAHB defines a second home area as a county where at least 10.3% of the total housing stock consists of a second home.
The county that had the highest share of second homes was Hamilton County, N.Y., where 75.3% of homes were considered a second home based on NAHB’s definition. By contrast, Scott County, Kan.; Andrews County, Texas; Crane County, Texas; and Hansford County, Texas all had no second homes.
The 17.5% of single-family construction that took place in second home counties during the second quarter of 2024 is up significantly from the fourth quarter of 2014, when these second home counties posted a single-family market share of 12.9%.
On a percentage basis, multifamily construction in second home counties experienced a higher growth during the same 10-year span, rising from 4.6% in the fourth quarter of 2014 to 8.6% in the second quarter of 2024 n
Look for registration forms online and in your email messages soon!
James Hardie Golf Tournament 2024!
The James Hardie Golf Tournament was held Thursday, August 15 at the Towhee Club in Columbia, Tenn. Over 300 golfers competed in the annual event while enjoying food and beverages from a course filled with tournament sponsors.
The CSDG team earned first place honors during the morning round. The foursome included Joe Haddix, Wayne Forestar, Will Smith, and Luke Koontz. Second place was secured by the Contract Lumber foursome featuring Danny James, Taylor Phillips, Ed Winders, and Clint Mitchell.
The Metro Carpets foursome scored second place during the round. Team members included Mitch Trawick, Austin Bream,
Kayla Long, and Tim Raley.
Third place honors went to the Davidson Homes foursome of Tom Thomas, Zach Custer, Jason Ezell , Craig Plank.
First round hole competition winners included Jake Haynes and Eric Kramer for the top "Closest to the Pin" efforts.
The United Communications team took home first place honors during the afternoon round. The foursome featured Donnie Claxton, Barry Childers, Wes Nichols, and Sterling Smith.
The Collier Engineering foursome earned second place honors during the round whose team members included Chad Collier, Roger Farmer, Bradley Farmer, and Derek Simmons.
Third place honors went to the Davidson Homes foursome of Grayson Simmons, Grayson Crowley, Guy Simmons, Clay Youngblood.
Second round hole competition winners included Donnie Morris who nabbed the "Longest Drive" prize, and Cliff Gilchrist who took home the “Closest to the Pin" award.
And Tim Turner won the popular "Helicopter Ball Drop" contest held during the afternoon round of the tournament.
A big thanks again to our title sponsor James Hardie Building Products and to all the tournament sponsors who are recognized on page eighteen n
Tuscan Iron Entries
Builders First Source
American Heating and Cooling
Blind Ambitions
Kenny & Company
Davidson Homes
Sealing Agents
Woodtone
CPM Sweeping
Force Roofing Systems
US Bank
Vavia
Pulte Homes
TimberTown
DR Horton
Huskey Building Supply
Carter Lumber
Metro Granite, Marble & Quartz
Parksite
RaganSmith
Greenrise Technologies
Contract Lumber
Cosentino
Metro Carpets
Hale Insurance
DominionX
Ferguson
LP Building Solutions
Mohawk
PDI Kitchen, Bath & Lighting
Ifoam
Goat Turf
Shade & Screen Solutions
Thank you tournament sponsors!
James Hardie Building Products -
title sponsors
DR Horton - Lunch
Huskey Building Supply - Breakfast
Platinum sponsors
Builders First Source
Carter Lumber
DominionX
Ferguson
GAF
Jeffco Flooring & Supply
Lennar
LP Building Solutions
RaganSmith
Sherwin Williams
US Lumber
Gold sponsors
CMP Sweeping
Greenrise Technologies
Henley Supply
Kenny & Company
Metro Carpets
Nashville Lumber
Sealing Agents
US Bank
Silver sponsors
Accuworks
Arcxis
Bank OZK
Blind Ambitions
Contract Lumber
Cosentino
Hale Insurance LLC
Intex Contracting
Metro Granite, Marble & Quartz
Mohawk Ind
Movement Mortgage
Ole South
OneTrust Home Loans
Parksite
PDI Kitchen, Bath & Lighting
Pulley & Associates/Delta
Renovative Building Group
Sims-Lohman
TimberTown
Tolbert Marketing & Events
Tuscan Iron Entries
United Communications
Wesley Mortgage
Hospitality sponsors
Ifoam
Intex Contracting
TrusJoist
SPIKE REPORT
Twenty-one 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 July 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, September 5th
Topic: "Using Open House Events to Maximize Builder Presence," with Margaret Tolbert, Tolbert Marketing & Events.
SMC Members Free thanks to Piedmont Natural Gas! Non-SMC members: $20 with RSVP; $25 w/o RSVP RSVP to: cnicley@hbamt.org
