As of now, the Census Bureau is estimating that 647,000 single-family homes were started in 2014 (the December numbers will get one more revision before they’re final). A question that has always interested NAHB is how many of these starts are teardowns—homes built on site where a previous structure had to be torn down first.
Trying to get information like this from builders can be a bit tricky. It’s not unusual for one of NAHB’s members to contract to build on a site without knowing the site’s full history. However, NAHB has contended that, had a previous structure been there, it would in most cases leave some evidence that a builder would notice. We’ve had discussions with the Census Bureau about adding a question like this to its Survey of Construction (the instrument used to generate the official starts numbers). In the interim, we decided to put the question to builders ourselves.
Hence, our survey for the February NAHB/Wells Fargo Housing Market Index asked single-family builders, “Of the homes you started in 2014, approximately what share were on a site where a previous structure, or evidence of a previous structure, was present before you started?”
Nearly all of the 349 single-family builders responding to the survey answered this question. On average, weighted by starts, they said that just under five percent of their starts were teardowns according to the survey’s criterion. This works out to a total of 31,800 single-family teardown starts in 2014, divided among the four principal Census regions as shown below:
In the West and South regions, the teardowns are close to proportional to total construction (as the South usually has over half of all single-family starts, and the West has about one-fourth). In these two regions, according to the survey results, teardowns accounted for a little over 5 percent of single-family starts in 2014. Elsewhere, teardowns accounted for only about 3 percent of single-family starts in the Midwest, and over 6 percent in the Northeast. Of the four regions, the Northeast has the oldest housing stock, and many of its desirable locations are in densely settled cities, or near the ocean, where buildable open space may be limited.