SINGLE-NEW FAMILY HOMES ARE BUILDING IN THE SMALLER MARKETS

 According to the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) we are seeing a change in the locations of single-family home builds. The building activity in the last 30 months shows a decrease in building in metro areas, largely due to COVID, housing affordability and highly regulated markets.

“The geography of home building has shifted over the last two and a half years, with more single-family and multifamily construction occurring in lower-density markets.  This shift was first caused by the initial impact of COVID shift continued in recent months due to housing affordability conditions that are causing both prospective renters and buyers to expand their geographic search for housing, aided by hybrid work patterns that allow for a combination of remote office work,” said NAHB Chief Economist Robert Dietz.

Another wrench in the system is the problem with getting building materials, construction labor shortages and and the Federal Reserve’s stingent monetary policy.  “Looking at the last 12 months, single-family production has slowed in all regional submarkets, both large and small, due to ongoing building material production bottlenecks, construction labor shortages, and the Federal Reserve’s tigtening monetary policy,” said NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Georgia.

The National Association of Home Builders Home Buidling Geography Index (HGBI)  is a quartley 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 National Association of Home Builders tracks single-family and multifamily grow rates and market shares in all seven regions of the U.S. The HGBI takes the place of the of the Leading Market Index (LMI).  The LMI would base their findings off single-family housing permits, employment, and home prices.

Currently it is report that the market share for single-family home builiding in large metro core and inner suburbs too a dive from 44.5% to 41.6% from the fourth quarter of 2019 to the second quarter of 2022.  This shows the precovid vs postcovid figures, accounting for the results due to COVID. In the outer suburbs of large and medium metro areas has jumped up from 17.4% to 19% during the same time period as the decrease in the larger areas. The share also increased from 28.8% to 29% in the small metro core counties and in rural areas it rose from 9.4% to 10.4% This is mainly due to homebuyers wanting to move away from the dense areas during COVID.

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2021 Saw A Huge Increase in Single-Family Starts

 

According to the NAHB's Eye on Housing New single-family starts grew exponentially in 2021. In fact this is the fist time since 2013 there has been such a fast pace in single-family new home starts. NAHB's Survey of Construction (SOC) reported 1,133,145 new single-family were started in 2021. This is 14% higher than reported in 2020.

The South Atlantic, West South Centeral and Mountain Divisions saw the most new single-family units starts which represented 20 states plus Washington DC. This accounted for 41% of the country and over two-thirds of the total new single-family housing starts in 2021. The Pacific Division increased to 106,240 accounting for 9% and the East North Central Division went to 93,693 accounting for 8%.

The other divisions including East South Central, West North Central, Middle Atlantic and New England made up the remaining 16%. Four of the division grew faster than the national level which were the Middle Atlantic with a 26% increase, the East South Central Division with a 23% increas ehte West South Central Division with a 19% increase.

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The Last Months of 2021 Saw Single-Family Permit Gains

 

The last months of 2021 saw a great gain in single-family permits in the housing industry. In the first ten months of the year, nationwide single-family permits totaled 948,321. Year-to-date (YTD) this shows a 17.3% increase from October 2020.

Each region had increases in single-family permits issued. The South reported the highest increase of 19.1%, next was the Northeast at 18.5%, the West at 15.6% and the Midwest came in with the smallest increase at 12.4%. Multifamily also saw an increase across all four regions. The West the most at 38.6%, Midwest 30.3%, the South at 23.8% and the Northeast at 15.5%.

At the local level, below are the top 10 metro areas that issued the highest number of single-family permits:

Metropolitan Statistical Area	Single-family Permits: (Units #YTD, NSA)
Houston-The Woodlands-Sugar Land, TX	44,342
Dallas-Fort Worth-Arlington, TX	43,012
Phoenix-Mesa-Scottsdale, AZ	30,013
Atlanta-Sandy Springs-Roswell, GA	27,283
Austin-Round Rock, TX	20,895
Tampa-St. Petersburg-Clearwater, FL	16,613
Charlotte-Concord-Gastonia, NC-SC	16,310
Orlando-Kissimmee-Sanford, FL	15,006
Jacksonville, FL	13,809
Nashville-Davidson–Murfreesboro–Franklin, TN	13,766

 

For multifamily permits, below are the top 10 local areas that issued the highest number of permits:

Metropolitan Statistical Area	Single-family Permits: (Units #YTD, NSA)
New York-Newark-Jersey City, NY-NJ-PA	34,380
Dallas-Fort Worth-Arlington, TX	22,782
Austin-Round Rock, TX	21,925
Seattle-Tacoma-Bellvue, WA	17,305
Los Angeles-Long Beach-Anheim, CA	16,880
Denver-Aurora-Lakewood, CO	13,345
Houston-The Woodlands-Sugar Land, TX	12,959
Miami-Fort Lauderdale-West Palm Beach, FL	12,771
Phoenix-Mesa-Scottsdale, AZ	12,671
Minneapolis-St. Paul-Bloomington, MN-WI	12,499

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Single-Family Homes Are Increasing in Size

Recent housing data shows that single-family new construction homes are increasing in size. COVID-19 has changed the way homeowners view their home and its square footage. Stay at home orders made homeowners live, work, school and play in their homes 24/7 during the height of the pandemic.

The Census Quarterly Starts and Completions by Purpose and Design and NAHB analysis revealed in the third quarter 2021 report that the square footage went from 2,337 square feet to 2,541 square feet for a median single-family home.

The NAHB Eye on Housing reveals that median home size has is 9.3% higher since the Great Recession lows. The average size for a single-family home is now 6.2% higher on a one-year moving average basis since the recession.

If you are in the market for a new home contact your local Realtor. A local sales professional can help you with your new home.

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Summer 2021 Saw An Increase in Single-Family Permit Gains

 

According to the National Association of Home Builders, the first 8 months of 2021 reported 775,772 single-family permits issued year-to-date. Compared on a year-over-year basis the end of summer 2021 saw a 25.8% increase over August 2020.

All four regions of the country reported increases. The highest in the Northeast was at 29.3% and the lowest was in the Midwest at 21.6%. The remaining regions were as follows the South at 26.4% and the West at 25.7%. Multifamily was also on the rise with 33.7% in the West, 27.2% in the Northeast, 24.9% in the Midwest and 24.6% in the South.

The same goes for all 50 states and the District of Columbia which reported increases across the country. The highest was in the District of Columbia with an increase of 208% from 87 to 268. The total of the 10 highest states was 62.3%

At the local level, below are the top 10 metro areas that issued the highest number of single-family permits.

Metropolitan Statistical Area	Single-family Permits: Aug (Units #YTD, NSA)
Houston-The Woodlands-Sugar Land, TX	36,359
Dallas-Fort Worth-Arlington, TX	35,572
Phoenix-Mesa-Scottsdale, AZ	25.209
Atlanta-Sandy Springs-Roswell, GA	22,768
Austin-Round Rock, TX	17,375
Tampa-St. Petersburg-Clearwater, FL	13,603
Charlotte-Concord-Gastonia, NC-SC	13,174
Orlando-Kissimmee-Sanford, FL	12,068
Nashville-Davidson–Murfreesboro–Franklin, TN	11,482
Jacksonville, FL	11,400

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New Homes Constructed With Central AC Are More Common in Some Regions Than Others

Ninety-five percent of new single-family homes built in 2020 were built with central air conditioning (AC) systems according to the Census Bureau’s Survey of Construction (SOC). Homes with central AC have been increasing since 2000 when there were only 85.5%.

The percentage of new single-family starts with central AC is different in the nine Census divisions. In West South Central, South Atlantic and West North Central divisions 100% had central AC installed, in East South Central 99%, and in East North Central 96%, in New England 83% and the lowest in the Pacific with 80%.

Ninety-nine percent of new single-family homes were built with an air or ground source heat pump or a forced-air system for the primary heating source of the home. As for each division, in the East South Central 77%  air or ground heat pumps were used, in the South Atlantic 75% and in the West South Central 20%. Air or ground heat pumps are primarily used in warmer climates because they are less efficient in colder regions. As for fuel, 50% of new homes built in 2019 used natural gas while only 45 used electricity.

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Private Residential Construction Spending Still on the Rise

Decreasing mortgage rates along with solid growth of spending on single-family construction and remodeling have kept the private residential construction up for the sixth consecutive month. According to the National Association of Home Builders, the Census Constructions Spending data reveal a 1.4% increase to a seasonally adjusted annual rate of $540.7 billion for total private residential construction spending this last December.

The National Association of Home Builders provides a monthly estimate of the total dollar value of construction work done called The Value of Construction Put in Place Survey (VIP). On the first day of each month data collection and estimation activities begin for the month. The data that is recorded includes the cost of labor and materials, cost of architectural and engineering work, overhead costs,

interest and taxes paid during construction, and contractor’s profits. The survey is based on construction work that is done each month on improvements to existing structures or new structures for private and public sectors.

The growth in spending on single-family construction and remodeling has been great for the housing industry. Single-family spending was up 2.7% in December 2019 at an annual pace of $289.3 billion. This was 5.2% higher compared to the figures reported in December 2018. The figures included in the private residential improvements were based on spending on remodeling, major replacements, and additions to owner-occupied housing units. In December the figures rose to a seasonally adjusted annual rate of $193.7 billion.

In the second half of 2019, as seen in the graph, there has been solid growth in single-family construction and home improvement. Also shown is new multifamily construction spending which slowed down since last summer but did see solid growth from 2010 to 2016 and a growth spurt from late 2018 to early 2019.

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