Now that the Christmas rush is behind us, it’s time to start prepping our homes for the winter cold. The National Association of Home Builders put together a quick little vid to share with us their tips on getting our homes warm, cozy and ready for the colder months ahead.

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October 31, 2014 – A growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015 while a growth in renters will keep the multifamily market at cruising altitude or higher, according to economists who participated in yesterday’s National Association of Home Builders (NAHB) 2014 Fall Construction Forecast Webinar.

“Single-family builders are feeling good. They are not overly confident, but confident enough to keep moving forward,” said NAHB Chief Economist David Crowe.

He added that the single-family sector will finish out the year much stronger than it began and set the stage for a robust 2015.

“This is mostly due to significant pent-up demand and steady job and economic growth that will allow trade-up buyers who have delayed home purchases due to job insecurity to enter the marketplace,” said Crowe.

A Bright Outlook

NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year.

Single-family production is expected to rise 2.5 percent this year to 637,000 units, increase an additional 26 percent next year to 802,000 and reach 1.1 million in 2016.

Setting the 2000-2003 period as a benchmark for normal housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to steadily rise from 48 percent of what is considered a typical market in the third quarter of 2014 to 90 percent of normal by the fourth quarter of 2016.

Multifamily starts, which Crowe said are now at a normal level of production, are projected to increase 15 percent in 2014 to 356,000 units and hold steady next year.

Meanwhile, the NAHB Remodeling Market Index, which averages ratings of current remodeling activity with indicators of future activity, matched its all-time high of 57 in the third quarter of 2014 and has been above 50 for six consecutive quarters. A reading above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.

NAHB is forecasting that residential remodeling will post a 3.4 percent decline in 2014 over last year, due in large part to slow activity in the first quarter caused by an unusual harsh winter throughout much of the nation. Residential remodeling activity is expected to rise 2.7 percent in 2015 and an additional 1.3 percent in 2016.

Housing Will Soon Be Undersupplied

Taking an even more bullish outlook, Mark Zandi, chief economist at Moody’s Analytics, said that prospects are good for continued gains in overall economic and housing activity.

“The reason is that job growth is quite strong,” said Zandi. “Currently, we are creating about 225,000 jobs per month, or 2.75 million per year. That is double the pace necessary to reduce unemployment and under employment, which augers very, very well for housing demand and the housing market more broadly.”

With the current supply of housing running just over 1 million units on annualized basis, Zandi said that this figure is well below what is needed for the longer run.

In the aftermath of the Great Recession, new household formations were depressed as the number of Millennials living with their parents or doubling or tripling up in apartments soared to about 3 to 4 million above normal, according to Zandi. As the economy continues to improve and these 18-to-34 year-olds begin to form their own households, this will boost overall demand for new housing construction.

“In a normal year, there should be demand for 1.7 million units,” he said, adding that each single-family home generates about 3.5 jobs over the course of a year and every multifamily unit produces 1.5 jobs over the same period.

Taking this one step further, Zandi said that increasing the housing stock by 700,000 units to meet this unmet demand would create 2.1 million jobs, which “would reduce unemployment by 1.5 percentage points.”

By the end of 2017, Zandi expects mortgage rates to rise from their current rate of about 4 percent back to their “equilibrium” of 6 percent, which he noted would be very consistent with a solid job market and solid housing market.

“The housing market will be fine because of better employment, higher wages and solid economic growth, which will trump the effect of higher mortgage rates,” he said.

He added that single-family starts could be closing in on 1 million units by the end of 2015 and multifamily production could go as high as 500,000 units.

Housing and Jobs Go Hand-in-Hand

Delving beneath the national numbers, Robert Denk, NAHB’s assistant vice president for forecasting and analysis, noted the housing recovery will vary by state and region.

“We are getting back to the point where economic conditions are dictating the strength of local housing markets,” said Denk. “It is very clear that those states with higher levels of payroll employment or labor market recovery are associated with healthier housing markets.”

Energy-producing states—North Dakota, Texas, Louisiana, Montana and Wyoming—where job growth is strong are also at the forefront of the housing recovery while Iowa and other farm belt states supported by agricultural commodities are also running above the nationwide average.

Meanwhile, states such as Nevada, Arizona, New Mexico, Alabama, Rhode Island and New Jersey that are coping with weak labor markets are also struggling to get their housing activity back on track.

Housing nationwide bottomed out at an average of 27 percent of normal production in early 2009 and the gradual and steady housing recovery now underway across the land will bring nationwide single-family housing starts to 68 percent of normal by the fourth quarter of 2015 and 90 percent of normal by the end of 2016.

In another way of looking at the long road back to normal, by the end of 2016 the top 40 percent of states will be back to normal production levels, compared to the bottom 20 percent, which will still be below 75 percent.

 

Read Original Article Here

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Single-family home construction costs are at the highest levels since 1998, according to a new report by the National Association of Home Builders. Costs were significantly higher in 2013 when compared to 2011 average construction costs—$246,453 in 2013 versus $184,125 in 2011.

Framing and trusses account for the largest share of construction costs, and a rise in the cost of lumber is most likely to blame, the NAHB report notes. The cost of softwood lumber rose 40 percent between April 2011 and April 2013, according to the Bureau of Labor Statistics’ Producer Price Index.

“Although lot sizes are shrinking, both the cost and size of the home are on the rise,” Heather Taylor of NAHB’s Economics and Housing Policy group notes in the report. The average home in 2013 was built on 14,359 square feet (or about at third of an acre) of land, the report notes. The average home boasted 2,607 square feet of finished area.

NAHB broke down the cost of construction on new single-family homes into the following eight major stages of construction:

  • Interior finishes account for 29.3% of construction costs
  • Framing: 19.1%
  • Exterior finishes: 14.4%
  • Major system rough-ins: 13.4%
  • Foundations: 9.5%
  • Site work: 6.8%
  • Final steps: 6.6%
  • Other costs: 0.9%

READ ORIGINAL ARTICLE FROM THE NATIONAL ASSOCIATION OF REALTORS HERE

House Prices Continue to Climb

Data released by the Federal Housing Finance Agency (FHFA) indicates that house prices rose nationally in October 2013 by 0.5% on a seasonally adjusted basis from the previous month.

However, house price changes varied across regions of the country. According to the release, four of the nine Census divisions, the Mountain Division, the Pacific Division, the Middle Atlantic Division, and the South Atlantic Division experienced a monthly gain of 0.9% or more. Monthly growth was more subdued in the West South Central region, the New England Division, and the East North Central. House prices in the West North Central were unchanged while house prices East South Central region of the country fell over the month by 1%.

Over the year, house prices have risen in every region of the country. House prices in the Pacific and in the Mountain regions, which include California and Nevada respectively, have experienced year-over-year gains greater than 10%.

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Data from the S&P/Case-Shiller House Price Index – 20 City confirms the house price appreciation that is taking place in the Pacific and Mountain Census Divisions. In addition, the data indicates that while some cities located in either the Pacific or Mountain Divisions have recorded extraordinary house price appreciation over the year, house price growth is generally strong across these two regions of the country. According to the release, the 20 City HPI rose by 14% over the past twelve months ending in October 2013. Nine cities experienced year-over-year house price appreciation greater than the national rate. Five of these nine cities are located in the either the Mountain or Pacific Census Division, including the four cities experiencing the largest year-over-year growth. The three cities located in the Pacific or Mountain Census Division that experienced year-over-year changes that lagged the national average, Seattle, Portland and Denver, still experienced year-over-year house price gains of 10% or more.

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For full histories of the FHFA US and 9 Census divisions, click here.

For full histories of the composites and 20 markets included in the Case-Shiller composites, click here.

READ ORIGINAL ARTICLE HERE.

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February 19, 2013 – The housing downturn of the last few years affected not only the number of new homes that are built each year, but also the characteristics, features and size of the ones that do get built.  Builders and other industry professionals now have an opportunity to find out what home buyers really want and will not give up in  today’s market, as well as which features they are ready to leave behind in light of current economic realities with a new publication from the National Association of Home Builders (NAHB). 

NAHB’s publishing arm, BuilderBooks, recently released What Home Buyers Really Want, a study which outlines home buyers’ preferences for home type and size, room layout and design, kitchen and baths, windows and doors, accessibility and outdoor features, electronics and technology in the home, energy efficiency and choosing a community.

The study was conducted by NAHB’s Economics and Housing Policy Group in 2012, based on a survey of home buyers nationwide. Results from the study are available by age, income, race and Census division, among other demographic characteristics.
“This survey is a great resource for building professionals, as it provides an inside look at the things home buyers really want or don’t want in their homes,” said Rose Quint, NAHB’s Assistant Vice President for Survey Research, and one of the study’s authors. “With the housing market beginning to recover, and more consumers in the position to purchase a home, it is more important than ever for builders to be armed with this information.”

What do home buyers really want?

  • First and foremost, energy efficiency.  Some of the most wanted features involve saving energy, i.e. energy-star rated appliances and windows, and an energy-star rating for the whole home.  Nine out of ten buyers would rather buy a home with energy-efficient features and permanently lower utility bills than one without those features that costs 2 percent to 3 percent less.
  • Home buyers also want help with organization and storage.  Large majorities want a laundry room, a linen closet in the bath, garage storage and a walk-in pantry.

What do most buyers not want?

  • An elevator – 70 percent would be unlikely to buy a home with this feature.
  • High density communities or golf courses.
  • Only a shower stall (no tub) in the master bath.

READ ORIGINAL ARTICLE HERE