NAHB News
BUILDERS STILL CAUTIOUS AS TRAFFIC IMPROVES
Builder confidence in the market for new single-family homes edged marginally higher in February as traffic of prospective buyers through model homes improved considerably, according to theNAHB/Wells Fargo HousingMarket Index (HMI), released in February. TheHMI rose a single point to 20 in themonth, still close to its recent historic low reading of 18 (the series began in January of 1985).
"While builders remain very cautious about the outlook for new-home sales given today's economic environment, the fact that more consumers appear to be checking out their options is a good sign," says Sandy Dunn, a home builder from Point Pleasant, W.Va., and the newly elected 2008 president of the National Association of Home Builders (NAHB).
"Some potential buyers who have been sitting on the sidelines are starting to at least research a new home purchase given improving affordability factors and the large selection of units on the market," says NAHB Chief Economist David Seiders. "That said, builders know there's a difference between people looking and people buying, and their current outlook remains quite subdued.Additional stimulativemeasures on the legislative and policy side are definitely needed to bolster consumer confidence and help bring about a housing and economic recovery."
Derived fromamonthly survey thatNAHB has been conducting formore than 20 years, theNAHB/Wells FargoHMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "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 thatmore builders view sales conditions as good than poor.
In February, the index gauging current sales conditions for single-family homes rose one point to 20, while the index gauging sales expectations for the next six months declined one point to 27. Meanwhile, the index gauging traffic of prospective buyers rose five points to 19, its highest level since July 2007.
Three out of four regions posted HMI gains for the month, including a three-point gain to 24 in the Northeast, a two-point gain to 24 in the South and a two-point gain to 15 in theWest. TheMidwest registered no change for the month at 16.
NATIONAL GREEN BUILDING PROGRAM OPENS
The National Association of Home Builders has launched the NAHB National Green Building Program, an education, verification and certification programthatwill allowbuilders anywhere to build green homes.
The New American Home, which celebrates its 25th anniversary this year, was the first show home to be certified in the new program. The project was awarded "gold" level certification during ceremonies Feb. 12. The program features a dynamic online scoring tool at www.nahbgreen.org, which shows the builder how to accrue points in seven categories: water, energy and resource efficiency; lot and site development; indoor environmental quality; global impact and homeowner education. The program sets point requirements in each category for the bronze, silver and gold levels. Homes are inspected and verified by local green experts and the documentation is sent to the NAHB Research Center for review. If the project qualifies, the home can receive national certification from the research center. Co-sponsored byNCHI and Buildermagazine, TheNewAmericanHome is a 6,725-square foot, plantation-style house located in the prestigious Waters Edge subdivision, a gated, 11-lot development in a private golf and country club community along the banks of Orlando's Lake Nona.
The home offers the latest in interior design, energy efficiency and cuttingedge technology. Among the green features:
- The front hall cupola acts as a solar chimney, drawing hot air up and out as it rises naturally to the highest point in the home, augmenting the cooling process and decreasing demand on the mechanical cooling systems.
- A sealed, fully-conditioned attic eliminates the intrusion of moisture-laden air and unwanted rust and mold and tempers the space, which means a cooler attic and better operating efficiencies of air handling equipment and ductwork placed within.
- Native landscaping, including live oaks, magnolia and dwarf hollies, need less extra water and irrigation and their placement helps shade the home from the hot sun.
OLDER BUYERS DOWNSIZING?BUT NOT BY MUCH
With the 55-plus population expected to exceed 85 million by 2014, the nation's homebuilders have been increasingly catering to the unique needs and interests of mature home buyers, according to a study that released in February by the National Association of Home Builders (NAHB) in conjunction with their International Builders' Show (IBS) inOrlando, Fla..
According to the data compiled by NAHB's 50+ Housing Council, more than a quarter of a million people will opt to buy new housing in communities specifically built for those ages 55 or older, and more than 100,000 units constructed in 2008 will be targeted to this growing niche market. The report, "Profile of the 50+HousingMarket," also dispels some common perceptions about the older home buyer: first, "downsizing" is a relative term and, second, the vast majority of these buyers won't be relocating to the Sun Belt.
"Our data shows that 55+ home buyers may be 'downsizing,' but not by much," says Paul Emrath, NAHB's lead researcher on the study. "The average home in an active adult community still includes more than two bedrooms and more than 2,000 square feet of living space." The report found that homes in age-restricted active adult communities were only slightly smaller than other homes purchased by 55+ home buyers in both square footage and the total number of rooms, including bedrooms and bathrooms, but were less likely to have a specialty room such as a den or library. In addition, the majority of age-restricted housing buyers (59 percent) indicated they felt they were moving into a better home than their previous one, although fewer than half (41 percent) said their new home cost more than the old one.
"These boomer buyers may be scaling back in their home size, but they aren't willing to sacrifice quality," says Robert Tippets, immediate past chairman of theNAHB 50+Housing Council and an active adult builder from Utah. "They're still looking for new homes that are well-designed and have many of the latest bells and whistles," he says. "What they are 'downsizing' is themaintenance that comes with owning the typical home with the big yard."
According to the American Housing Survey data NAHB's researchers analyzed, most buyers (77 percent) chose a new home in a particular agerestricted community because they liked the home's look and overall design, while the top reasons they chose the community was the design (49 percent) and to be close to friends and relatives (28 percent). More than half of all new buyers in 55+ communities move within the same county they currently live in.
The report also suggests that new home buyers in this nichemarket are not as adversely affected by the current troubles in themortgagemarket. Fewer than half of the customers who bought a new home in an age-qualified active adult community needed to take out amortgage.Of those who did, the study found, the loan-to-value ratio was under 50 percent. Nearly all home buyers in these communities who made a down payment reported that the down payment came from the sale of a previous home. "These consumers have substantial equity in their existing homes and greater accumulated wealth," saysMark Stemen, senior vice president with K. Hovnanian's active adult division in the mid-Atlantic and a member of NAHB's 50+Housing Council. "They are discretionary buyers and their purchases are very much driven by a desire for the lifestyle these types of communities offer."
How theymight be affected by the slower housing market, he says, is in the selling of their existing homes. Despite that, Stemen remains bullish on the active adult segment of the housing industry. "Given the strong demographics of the baby boom generation, the active adult buyer will continue to be a very important housing consumer for a long time to come," he says.
The complete Profile of the 50+ Housing Market report is available free to members of the NAHB 50+ Housing Council and can be purchased by non-members in a downloadable format at www.nahb.org/50plusresearch.
