Who Are NAHB’s Associate Members?

December 12, 2013

Every year NAHB conducts a member census in order to better understand the composition and characteristics of the people who belong to its organization.  In 2012, two-thirds of NAHB’s members were associate members—those indirectly involved in home building.  The remaining third were builder members—those directly involved in home building.  Last month we gave readers an in-depth look at NAHB’s builder members, and this month we are going to focus on associate members.

Of the 83,141 associate members, 40 percent are primarily subcontractor/specialty trade contractors, 13 percent have a professional specialty, 10 percent are retail dealerships or distributorships, 9 percent perform financial services, 5 percent are wholesale dealerships or distributorships, and 21 percent have some other type of primary activity.

associate blog

NAHB’s associate members work at companies with, on average, 54.4 employees. About half, 53 percent, of associate members reported working at companies with less than 10 employees.

Compared to the prior two years, NAHB associate members had a good year in 2012.  Over half, 52 percent, of associate members reported that their company had a dollar volume of $1 million or over.  The median dollar revenue increased from $1,176, 762 in 2010 and $1,069,386 in 2011 to $1,277,805 in 2012.

NAHB associate members have a median age of 54, and have been a member for, on average, 11 years.  Compared to builder members, significantly more associate members are female—18 percent of associate members, compared to only 7 percent of builder members.  About half, 51 percent, of associate members have at least a college degree.

For more details about NAHB associate members and a profile of each type of member, please visit housingeconomics.com or click here for the full article.


Who are NAHB’s Builder Members?

November 12, 2013

Every year NAHB conducts a member census in order to better understand the composition and characteristics of the people who belong to its organization.  In 2012, a third of NAHB’s members were builder members—those directly involved in home building.  The remaining two thirds were associate members—those indirectly involved in home building.  Of the 40,632 builder members, over half (58 percent) were single-family builders (spec/tract, custom, or general contracting), about a quarter (26 percent) were residential remodelers, 5 percent commercial remodelers, 4 percent land developers, 4 percent multifamily builders, 1 percent commercial remodelers, and another 1 percent manufacturers of modular/panelized/log homes.

Member Census

Company Details

NAHB’s builder members work at companies with, on average, 11.5 employees.  Half of these employees are involved in construction work, and the other half non-construction work.  About half, 52 percent, of builder members reported working at companies with between 1 and 4 employees.

Despite having about the same number of employees since 2010, builders both built more units and made more money in 2012.  Builder members report that their company built, on average, 30 units in 2012.  This average is up from 22 units in 2009, 24 units in 2010 and 28 units in 2011.  For the first time since the census started in 2008, NAHB builder members reported their company had median revenue of over $1 million–$1,063,254 to be exact.

Builder Details

NAHB builder members have a median age of 56, and have been a member for, on average, 15 years.  Ninety-three percent of them are male and half of them have at least a college degree.

For more details about NAHB builder members and a profile of each type of member, please visit housingeconomics.com or click here for the full article.

For details on NAHB’s associate members please look out for next month’s article on housingeconomics.com.


Builders Have Eased Use of Sales Incentives

November 4, 2013

One way many builders choose to bolster sales and/or limit cancellations is by providing incentives that sweeten the deal for home buyers.  The popularity of these incentives, however, is very much tied to the cycles of the housing industry.  A survey of NAHB’s builder members found that 36 percent are not offering any kind of special incentives in October 2013, a share that is 2.5 times larger than it was in December 2008 (14 percent) during the housing bust, but is closer to the 42 percent who offered no sales incentives in September 2005 in the midst of the housing boom (Figure 1).  The incentives questions are appended to the monthly survey that produces the NAHB/Wells Fargo Housing Market Index.

Offering options or upgrades at no or reduced costs is generally one of the most popular ways builders attract buyers.  In the latest survey, 37 percent of builders said they are currently offering such options, essentially the same share as in 2005 (35 percent), but significantly lower than the 67 percent who offered them in 2008.

Another way builders incentivize their prospective buyers is by offering to pay closing costs or fees.  Similar to offers of free or reduced cost options, the use of this incentive has eased to 2005 levels.  In the recent survey, 27 percent of builders report paying closing costs for their buyers, less than half the 59 percent who did so in 2008, and more along the 26 percent using it as an incentive in 2005.

Figure 1. Popular incentives used by builders to bolster sales and/or limit cancellations – History
(Percent of Respondents)

Graphs for Incentives Blog1

Discounting home prices or reducing margins, meanwhile, is still being done by 32 percent of builders to bolster sales.  Although this is a larger share than in 2005 (19 percent), it is nowhere near the 72 percent who were lowering prices at the end of 2008.  The 2005 survey did not ask builders if they were helping buyers sell their existing homes, but it became common enough to make it on the survey by December 2008 – when 29 percent of builders reported doing it.  By 2013, only 15 percent are still helping sell the buyer’s existing home.

Among those builders not currently using any special sales incentives, 37 percent indicate the reason for not doing so is because they “don’t advertise – only build custom homes and rely on word of mouth,” another 35 percent explain it is because the “market is now strong enough and no incentives are needed,” while 27 percent say it is because they “cannot afford to offer incentives due to rising construction costs” (Figure 2).

Figure 2. If not using special incentives, why not?
(Percent of Respondents)Graphs for Incentives Blog2

It remains to be seen if the use of these incentives continues on a downward trend or if their use reemerges once again.  The strength and pace of the housing recovery will determine it.  The full report on the survey about use of incentives is available here.


The Ripple Effect of Home Buying

October 9, 2013

Using the Consumer Expenditure Survey (CES) data from the Bureau of Labor Statistics (BLS), NAHB Economics research shows that a home purchase triggers additional spending on appliances, furnishings, and remodeling. Such spending typically exceeds that of non-moving home owners and persists for two years after moving.

The NAHB analysis compares spending behavior among three groups of single-family detached home owners: buyers of new homes, buyers of existing homes and non-moving owners. During the first two years after closing on the house home buyers tend to spend on appliances, furnishings and property alterations considerably more compared to non-moving owners. However, home buyers tend to be larger households with children, and on average wealthier, with higher levels of education and concentrated in urban areas. Any of these factors could potentially explain higher spending on appliances, furnishings and remodeling by home buyers. Thus, the NAHB analysis controls for the impact of household characteristics on expenditures, and, nevertheless, finds that a home purchase alters the spending behavior of homeowners and that otherwise similar homeowners spend more across all three categories compared to non-moving owners during the first two years after moving. Ripple_blog1

Looking at spending patterns of new home buyers and identical households that do not move, the differences are largest on furnishings. A typical new home buyer that buys a new home is estimated to spend in excess of $3,000 more on furnishings than an identical household that stays put in a house they already own. The elevated level of spending persists into the second year as new home buyers spend additional $2,000 over their typical budget on furnishings.

Similarly, moving into a new home triggers higher levels of spending on appliances. A typical new home buyer that moves into a new home is estimated to spend $1,005 more on appliances during the first year compared to a non-moving owner. The difference shrinks to $348 during the second year and goes away after that.

In the case of property repairs and alterations the differences are smallest, $740, and last only one year, which is not surprising considering that most households would not want to spend years in a house with ongoing remodeling projects.

Buying an older home also triggers additional spending. The typical buyer of an existing home tends to spend close to $4,000 more on remodeling, furnishings, and appliances compared to otherwise identical homeowners that do not move. However, in case of buying an older home, most of this extra spending goes to remodeling projects, more than $2,000, and occurs during the first year after closing on the house. Only the additional spending on furnishings tends to persist beyond the first year.

Ripple_blog2

The statistical analysis further shows that this higher level of spending on furnishings, appliances and property alterations is not paid by cutting spending on other items, such as entertainment, transportations, travel, food at home, restaurants meals, etc. This confirms that home buying indeed generates a wave of additional spending and activity not accounted for in the purchase price of the home alone.

In summary, the NAHB analysis shows that during the first two years after closing on the house a typical buyer of a new single-family detached home tends to spend on average $7,400 more than a similar home owner who does not move, including $4,900 in the first year after purchase.  Likewise, a buyer of an existing single-family detached home tends to spend about $4,000 more than a similar non-moving home owner, including $3,600 during the first year. The overall ripple effect of home buying does not stop here, as producers of appliances, furnishings and remodelers spend their additional income paid by home buyers and trigger further waves of economic activity.


Welcome to Our New Economist Joshua Miller

August 7, 2013

This week Dr. Joshua Miller joined the staff of the Economics and Housing Policy Group here at NAHB. Among other research responsibilities, Josh will be working with NAHB’s local economic impact model, which estimates job creation and economic benefits that flow from home building.

You can read the biographies of Josh and the other economics staff who contribute to Eye on Housing at the following link:

http://eyeonhousing.wordpress.com/nahbs-economists/


Improving Markets Index: Erie, PA MSA

September 27, 2012

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions.  The three series are employment, house prices and single family housing permit growth.

For the twelfth release , 99 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Erie, Pennsylvania metropolitan statistical area (MSA).

The improvement of the Erie economy and its housing market is due to several factors including a recovery in manufacturing, which employs about 25% of the workforce, its position as a major retail center, drawing shoppers from the tri-state area (OH, NY and PA) as well as Canada, and its position as a fast growing regional healthcare center with a number of large hospitals including UPMC Hamot, Millcreek Community Hospital, and St. Vincent Medical Center.  In addition there is Saint Mary’s, a large nursing home with numerous facilities and Regional Health Service Inc. with many offices scatterd across the area and the already large and expanding  Lake Erie College of Osteopathic Medicine (LECOM) which has a medical school, school of pharmacy and a new dental school.  Erie also benefits from a steady stream of tourists who travel from Cleveland, Pittsburgh and Buffalo to enjoy access to Lake Erie and beautiful Presque Isle.  Erie is also home to a number of colleges including (Penn State) Berhend College, Gannon University, Mercyhurst University and Edinboro University.  Lastly, Erie is home to the Erie Insurance Group, GE Transportation Systems which makes among other things locomotives, Plastek Industries and a large Lord Corporation facility.            

According to home builder Mike Corsi, Vice President of the C & C Development Group, “things are definitely getting better.  The combination of growth at the hospitals and universities and turnover at our large firms has guaranteed a steady stream of well paid households that continually relocate here for work.  In addition, growth at LECON has resulted in a shortage of rental apartments for the students and increased demand for housing from new faculty that frequently results in a demand for new housing.   We are also witnessing a rise in remodeling activity.  It’s being caused by the simultaneous realization by many home owners that they will be staying their existing house for a while longer, and that home prices are on the upswing.”  He concluded by saying “tourism also is a big help.  While many tourists come just for the weekend to enjoy the water, the vineyards or skiing, others buy cottages and stimulate the economy in that way.”              

According to Jim Grieshober, Owner of J.E. Grieshober Plumbing-Hydronics , “Erie never saw huge increases in real estate prices and as a result has not seen much in the way of a decline either.  We miss the highs and the lows.  And, of late pent-up demand is starting to make itself felt among those who are more secure in their job and can get a loan.  Things would be even better if only the credit situation improved and if new regulations that add thousands and thousands to the price of a new house had not been passed.  That being said, the cost of living is low, Lake Erie is quite a draw and there is not much inventory around.”  Whatever the cause, house prices are definitely firming.  They are up 1.4% since the trough in February 2011 and are off less than 3.7% from their all–time high set in December 2009.    

Improving economic conditions have resulted in payroll employment being down exactly 2% from its peak in June 2000 and up by a healthy 9.9% since the trough in January 2010.  Single family permitting activity is up 8.0% on a seasonally adjusted monthly average basis from the trough set in April 2011.  While new homes are being built in many parts of Erie, activity has been primarily centered in a ring around the outskirts of Erie extending from Girard Township, Fairview Township and Millcreek Township in the west, through Summit Township in the south and Harborcreek Township in the east.


Improving Markets Index: Palm Bay, FL MSA

September 20, 2012

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions.  The three series are employment, house prices and single family housing permit growth.

For the twelfth release , 99 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Palm Bay-Melbourne-Titusville, Florida metropolitan statistical area (MSA).

The turnaround in the Brevard County economy and its housing market is due to several factors including a steady rise in tourism and recreation expenditures compared to 2010 including a rise of almost 10% in the number of multi-day cruise passenger traffic departing from Port Canaveral.  The area also benefits from its position as a large regional healthcare center with three large healthcare systems including Health First, Inc., Holmes Regional Medical Center and Wuesthoff Health System, Inc., which together employ close to 11,000 persons.  Brevard County is also is home to Patrick Air Force Base, Cape Canaveral Air Force Station, the US Air Force Malabar Test Facility, a naval Trident ballistic missile submarine turning basin and a Naval Ordnance Test Unit.  Brevard County also boasts a large number of high-tech firms such as Harris Corporation, Boeing, Northrop Grumman, Lockheed-Martin, Rockwell-Collins, Honeywell and many other firms that have recently grown and have largely made up for the gradual decline and eventual loss of the Space Shuttle program.   

According to home builder David Armstrong, President of Armstrong Custom Homes, “things are definitely getting better.  The combination of an active and aggressive Economic Development Corporation, the creation of the duty-free zone in Titusville and the expansion of many of the high-tech firms here are helping us backfill the loss of the space center.  In addition, the announcement that Space-X will be expanding here has also boosted buyer spirits.  We are also seeing a rise in remodeling.  Many owners now convinced that they will be staying their existing house for a while longer, are adding a second floor and or updating kitchens and bathrooms.  Another factor in the turnaround is that the national news is getting better and buyers are tired of waiting and are not getting younger.”  He concluded by saying “another indicator of our improving economy is the increase in small business activity.  More new business are opening and that too is helping.”              

According to Marcia Bartley, President of All Pro Title, Inc., “the inventory of existing homes is declining and that is putting upward pressure on prices.  On top of that there are no spec homes being built and the foreclosures that are on the market tend to be in poor condition and buyers are no longer willing to tolerate the false starts and delays that come with trying to purchase one of them.  As a result of these factors, appraisals are starting to rise and that gives prospective buyers increased confidence and as a result, a feeling of cautious optimism is starting to take hold.”  Whatever the cause, house prices are definitely firming.  They are up 6.4% since the trough in April 2011 and look to continue rising through the end of this year and into 2013 and beyond.    

Improving economic conditions have resulted in payroll employment being down less than 11% from its peak in May 2006 and up by 1.3% since the trough in December 2011.  Single family permitting activity is up 2.0% on a seasonally adjusted monthly average basis from the trough set in April 2009.  While new homes are being built in many parts of Brevard County, activity has been primarily centered in the Viera area where there is a new VA clinic, a new hospital, the government center, excellent shopping and is where the spring training home of the Washington Nationals is.  West Melbourne, between Melbourne and Palm Bay, is also a place where new construction activity is pronounced, in large part due to the excellent school system.


Improving Markets Index: Canton, OH MSA

September 5, 2012

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health.  The three are employment, house prices and single family housing permit growth.

For the eleventh release , 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Canton-Masillion, Ohio metropolitan statistical area (MSA).

The health of the Canton housing market is in part due to its business friendly environment and low state and local taxes, and the presence of four growing colleges and universities including Stark State College with a student population of over 15,000, and Walsh University with an enrollment of about 3,000.  Canton also benefits from being a growing regional healthcare center with Aultman Hospital and its 5,000 employees as well as Mercy Medical.  However of late, Canton’s growth is primarily, due to the all important Utica shale, a rock layer several thousand feet below the Marcellus shale, and which lies directly below Canton.  As a result Chesapeake Energy, Exxon, Anadarko, Chevron and others are starting to drill and other energy related firms including Slumberger, Baker Hughes, Michael Baker Corporation, and J-W Wireline are all setting up shop.  Canton also benefits from the presence of national firms like Belden Brick, Marathon Petroleum and GE Capital and is the Global headquarters of The Timkin Company and Diebold Incorporated.     

According to home builder James Rudo, President of VictoryGate Custom Homes, “drilling companies as well as oil and gas service companies are setting up operations.  While the Utica shale is just starting to be exploited through fracking and horizontal drilling, the effects of it are being felt in many ways.  For example field managers and executives are beginning to relocate here and these new households not only need housing but often want new houses.”  He went on to say that, “there is not much standing inventory and what little exists is in poor shape.  As a result it is often cheaper to build a new home than buy an existing house and remodel it.  As a result holding a spec is hard as everything sells.  As a matter of fact, things are so good we just hired a new supervisor.”  He closed by saying “referrals are a huge part of our business and we augment it with some light advertising.     

According to Barbara Bennett, President, a managing partner at the engineering firm Hammontree & Associated, Limited, “because of the Utica shale our hotels are full, are restaurants are all busy, there are no vacant storage facilities or warehouses, and there is a constant shortage of truck drivers.  In addition, there is a dramatic up-tick in industrial development and infrastructure improvements.  As a result of this added activity, not to mention the cashing of royalty checks by landowners, the local economy is more vigorous than ever.  As a matter of fact, we are currently working with developers on two brand new subdivisions.”  As a result, house prices have held up well over the past few years.  Prices are up 1.6% since the trough in January 2011 and are off less than 19% from their all-time high set in June 2006.     

Improving economic conditions have resulted in payroll employment being off just 6.2% from the high of the past decade set in July 2002 and up by 7.8% since the trough in October 2009.  Single family permitting activity is up a robust 9.7% on a seasonally adjusted monthly average basis from the trough set in November 2011.  While new homes are being built in many parts of the Canton MSA, activity has been primarily centered in northern Stark County including the City of Green and Jackson Township.


Improving Markets Index: Victoria, TX MSA

August 28, 2012

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI is intended to draw attention to the fact that housing markets are local and that there are metropolitan areas where economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and are indicative of improving economic health.  The three are employment, house prices and single family housing permit growth.

For the eleventh release , 80 markets are currently classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Victoria, Texas metropolitan statistical area (MSA).

The health of the Victoria housing market is due to near equidistant location from Austin, Corpus Christi, Houston and San Antonio making it the regional hub of South Texas.  Additionally, the growth of both Victoria College and the University of Houston–Victoria, Victoria’s growing position as a regional healthcare, shopping and entertainment center, and its large and growing petrochemical industry have also boosted the local economy.  However, it’s the new 1.3 million sq ft. Caterpillar hydraulic excavator facility and the even more recent and sudden exploitation of the Eagle Ford Shale just north and west of Victoria, due to hydraulic fracking, that are causing Victoria to boom.  Due to Caterpillar a number of suppliers are moving to town and because of the nearby Eagle Ford shale, many oil service firms including pipeline and drilling companies are fast locating nearby.     

 According to home builder Tony Prokop, President of Prokop Custom Homes, LLC, “because we are one of the biggest cities near the Eagle Ford shale people in the oil and gas industry are moving here from all over the country.  And, since drilling is expected to last well over a decade, these same people are putting down roots and buying nice homes. Due to the fact that there was already a very limited inventory of existing homes before Caterpillar built here, the petrochemical plants expanded and fracking began, the new demand translates directly into strong demand for new upscale housing.”  He went on to say that “it’s also important to note that there are also lots of new homes and second homes being built by landowners who are now getting monthly royalty checks from the oil companies, not to mention all the new cars and boats being sold.” 

According to Howard Marek, a partner in the law firm of Marek, Griffin & Knaupp, “business is doing so well we are seriously considering growing the size of our firm.  Hotels are all full, and builders are building new homes in all price ranges.  In addition, because of all the in-migration, more restaurants are opening up and there is talk of other large employers moving to Victoria.  On top of all this, we expect more suppliers to move here, after all Caterpillar broke ground on its initial facility less than 18 months ago.”  Whatever the causes, house prices have held up well over the past few years.  Prices are up 13.5% since the trough in February 2011 and recently surpassed the previous high set in June 2010.       

Improving economic conditions have resulted in payroll employment being down just 1.5% from its high of 51,900 set in August 2008 and up by 5.6% since the trough in November 2009.  Single family permitting activity is up 4.7% on a seasonally adjusted monthly average basis from the trough set in September 2010.  While new homes are being built in many parts of the Victoria MSA, activity has been primarily centered south of the city from the Port of Lavaca to Port O’Conner all the way to Rockport, with additional activity northwest of town in Cuero close to the Eagle Ford shale.


Improving Markets Index: Terre Haute, IN

August 16, 2012

NAHB recently unveiled an index that tracks housing markets on the mend, the NAHB/First American Improving Markets Index (IMI).  The IMI highlights the fact that housing markets are local and that there are metropolitan areas where an economic recovery is underway.  The index measures three readily available monthly data series that are independently collected and indicative of improving economic conditions.  The three series are employment, house prices and single family housing permit growth.

For the eleventh release , 80 markets are classified as improving under a conservative examination of local economic and housing market conditions.  Among these areas is the Terre Haute, Indiana metropolitan statistical area (MSA).

The resurgence of the Terre Haute economy, and its housing market, is due Terre Haute being a large regional healthcare center, the presence of Indiana State University, the Rose-Hulman Institute of Technology, Ivy Tech Community College and St. Mary-of-the-Woods College.  Its location not far from Evansville, Indianapolis and St. Louis also helps.  In combination, healthcare and post-secondary institutions employ over 7,000 persons and are three of the five largest employers in the area.  In addition, there is a considerable amount of manufacturing in Terre Haute including the largest disc production facility in the United States, Sony DACD.  Other manufacturers with a large presence in Terre Haute include Bemis, a supplier of flexible packaging and pressure sensitive materials, GE Aviation, which manufactures turbine engine components, ThyssenKrupp Presta, a manufacturer of automobile steering columns, and others.  Terre Haute also benefits from the presence of a United States Federal Corrections Complex as well as the Indiana Air National Guard.   

According to home builder Rick Jenkins, owner of Richard Jenkins Construction, “the combination of a mild winter and historically low interest rates have caused pent-up demand to finally materialize.  In addition, our colleges are all expanding which results in more staff and that translates into increased demand for housing.  Also, until recently agriculture was doing well putting more money into the hands of farmers who bought houses and whose increased spending caused others to buy houses too.”  He went on to say that there is increased buyer confidence now that prices are on the upswing and because we got through the Pfizer plant closure and the loss of the fighter jets at the Air National Guard facility relatively unscathed; that is without a fall in house prices or employment levels.”              

According to Tim Malooley, General Manager of Niehaus Home Centers, “it’s a combination of several things that’s causing our market to perk up.  First, there never was never much overbuilding and as a result prices never had far to fall.  Second, because of all the hospitals and universities there is always a good deal of turnover which helps the housing market and third, there is a small but steady flow of immigrants who move here for jobs and more often than not, those transferees want a new house.  Were it not for the credit crunch, things would be much better.”  In spite of a lack of credit, house prices are definitely firming.  They are up 0.3% since the trough in August 2011 and are off less than 9.0% from their all-time high set in September 2006.   

Improving economic conditions have resulted in payroll employment being just 8.9% from its peak in March 2000 and up by 2.5% since the trough in December 2011.  Single family permitting activity is up 2.0% on a seasonally adjusted monthly average basis from the trough set in February 2011.  While new homes are being built in many parts of the four-county Terre Haute MSA, activity has been primarily centered in the south and southeast parts of Vigo County close to the city.  After Vigo County, Clay County has been most busy, but due it being rural, activity has been quite scattered. 


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