We had such a great time at the Greater Cedar Rapids Housing and Building Association Remodelers Night Out last Thursday at the Iowa Brewing Company in Cedar Rapids. There were over 100 attendees and the group raised over $8,000 that night to be used for several charities in the area. Congrats to Rob Hajek for organizing the event and to the many sponsors and participants.
HBAI Group Health Insurance Update
We met with Wellmark yesterday and things are progressing fairly well for our HBAI group health insurance. It’s taken a significant amount of time and Kunkle and Associates in Dubuque has bent over backwards to help make this all happen. So, if all goes well, we are looking at a January 1, 2020 start date. Marketing and info will follow in the next few months.
HBAI Member Rebate Totals
We have a member benefit that not enough of you participate in and that’s leaving lots of money off the table for you, along with our state and local HBA’s. The overall numbers are impressive, but it’s crazy if you’re not utilizing our member rebate program. Here are the numbers to date:
- 144 Registered Builder & Remodeler Members (told us where to mail their rebate check)
- 89 have participated (sent in a rebate claim)
- Of the 89 that participated, $329,070.25 has been cumulatively paid out to them
- Cumulative average per member = $3,281.69!
- Q2’19 Claim Deadline: Friday, August 30, 2019
Claim for Residential Jobs Completed April 1 through June 30, 2019. All claims MUST be submitted by the set claim deadline for each quarter. It’s so easy, go to www.HBAIowarebates.com.
The Greater Iowa City HBA Nail Drivers Open at Brown Deer last week was fantastic. They raised a bunch of scholarship money to be used for female students entering the building trades.
Building Material Price Declines
Prices paid for goods used in residential construction decreased by 1.1% in June (not seasonally adjusted) according to the latest Producer Price Index (PPI) released by the Bureau of Labor Statistics. The decline broke a four-month trend of increases and was only the fifth month over the past two years in which prices fell.
Over the past 12 months, building materials prices have decreased 1.6%, just the fifth June year-over-year decrease since 2000. The decline is a sharp reversal of June 2017 to June 2018, during which prices increased 8.8%.
The PPI report shows that softwood lumber prices decreased (-1.7%, not seasonally adjusted) in June-the index’s third consecutive monthly decline. Prices remain at their lowest level since February 2017. While weekly prices have been volatile since mid-May according to Random Lengths, the difference between the average prices of softwood lumber in May and June mirrored the PPI data (-1.8% v. -1.7%).
One of the special indexes published by BLS tracks lumber and plywood in one category. Similar to softwood lumber, the lumber and plywood index fell 2.3%. Prices paid for softwood lumber and lumber and plywood have decreased 23.1% and 17.6%, respectively, since June 2018.
The price index for gypsum products continued its downward trend in June, declining 1.9%. In the last 10 months, gypsum prices have only increased twice. Prices have declined by 6.2% and 10.8% since January 2019 and August 2018, respectively.
Ready-mix concrete prices increased 1.2% in June and remain relatively volatile. Prices have risen by more than 1.0% in two of the past three months, something that has only happened in 18 of the previous 231 months.
Builder Confidence Holds Firm in July
Builder confidence in the market for newly built single-family homes rose one point to 65 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This marks the sixth consecutive month that sentiment levels have held at a steady range in the low- to mid-60s.
Builders report solid demand for single-family homes. However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes.
Even as builders try to rein in costs, home prices continue to outpace incomes. The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns. Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place according to the NAHB HBGI. Lower recent have driven new home sales 4% higher on a year-to-date basis thus far in 2019, while single-family permits continue to lag.
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index 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.
All the HMI indices inched higher in July. The index measuring current sales conditions rose one point to 72, the component gauging expectations in the next six months moved a single point higher to 71 and the metric charting buyer traffic increased one point to 48.
Looking at the three-month moving averages for regional HMI scores, the South moved one point higher to 68 and the West was also up one point to 72. The Northeast remained unchanged at 60 while the Midwest fell a single point to 56. The HMI tables can be found at nahb.org/hmi.
Single-Family Starts Increase in June
Single-family gains helped offset a drop in multifamily production as total housing starts edged 0.9% lower in June to a seasonally adjusted annual rate of 1.25 million units, according to a report from the U.S. Housing and Urban Development and Commerce Department.
The June reading of 1.25 million starts is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts increased 3.5% to 847,000 units. The multifamily sector, which includes apartment buildings and condos, fell 9.2% to a 406,000 pace.
“The monthly pick up from May to June in single-family starts is in line with the slight rise in our latest builder confidence survey, as demand remains solid due to a healthy job market,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.
“The relatively flat housing starts data in June is due to a decline in multifamily production, which still remains somewhat elevated due to affordability concerns in the for-sale market,” said NAHB Chief Economist Robert Dietz. “The Census data show that the only region showing single-family construction gains for the first half of 2019 is the South, where housing is generally more affordable relative to incomes.”
Regionally, combined single-family and multifamily starts in June rose 31.3% in the Northeast, and 27.1% in the Midwest. Starts declined 9.2% in the South and 4.9% in the West.
Overall permits, which are a harbinger of future housing production, fell 6.1% to a 1.22-million-unit annualized rate in June. Single-family permits edged 0.4% higher to 813,000 while multifamily permits fell 16.8% to 407,000.
Looking at regional permit data, permits rose 21.9% in the Northeast. Permits fell 10.4% in the South, 7.9% in the West and 0.6% in the Midwest.
The Greater Des Moines HBA HomeShowExpo Block Party was so fun last Tuesday evening, despite the heat. All six of the gorgeous homes were available to tour, there was fantastic food from Great Caterer’s of Iowa, and the NADA’s performed. Always a great event.