NAHB News, May/June 2009
NEW-HOMES INVENTORY CONTINUES SHRINKING IN MARCH
The number of newly built, single-family homes on the market declined for a 23rd consecutive month in March as builders focused on winnowing down their inventories of unsold units, according to new-home sales data reported by the U.S. Commerce Department today. Inventory shrank to 311,000 units, which is a 10.7-month supply at the current sales pace.
"Builders are doing a great job of thinning the supply of unsold homes and positioning themselves for a slow but steady housing recovery," notes NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "Today's numbers are a welcome sign that the market is stabilizing as some of the best home buying conditions in a lifetime are drawing consumers off the fence and back into the market."
The latest government data indicated that new-home sales in March remained virtually on-pace with a relatively strong, upwardly revised number from the previous month. Sales were reported at a seasonally adjusted, annual rate of 356,000 units, which was off just 0.6 percent from February.
"In line with NAHB's forecasts, we continue to see evidence that the new-home sales market is bottoming out as historically low mortgage rates, attractive home prices and incentives like the newly created $8,000 first-time home buyer tax credit spur more interest among consumers," says NAHB Chief Economist David Crowe. "That's particularly true in the West, where a 15 percent gain in March can be attributed in part to
California's implementation of an up-to-$10,000 tax credit for buyers of newly built homes-which, when combined with the federal first-time buyer credit, creates a sizeable inducement to purchase."
Regionally, new-home sales activity was somewhat mixed in March, with the two largest markets posting the best results. The West registered a 15.1 percent gain, while the South held even with the previous month's improved sales pace, the Midwest posted a 7.8 percent decline and the Northeast posted a 32 percent decline.
NEW STUDY SAYS GROWING NUMBERS OF BOOMERS HEADING TO AGE-RESTRICTED COMMUNITIES
Most Baby Boomers, like their parents, are choosing to "age in place," but a large and growing number-more than 1.2 million households-are choosing to move to communities designed to meet their needs, according to a study released by the NAHB and the MetLife Mature Market Institute (MMI). The data is significant because, by 2010, the Boomers will represent one quarter of the U.S. population-a group that will greatly impact the choices available in the housing market.
"The Baby Boomers' influence on housing choices has been profound, and will have a huge impact on trends in housing for the mature market as that age group continues to move toward retirement," says Sandra Timmerman, director of the MetLife Mature Market Institute. "Some findings, such as the tendency for buyers in 55+ communities to continue to work in greater numbers and for longer periods of time, show us that this group is redefining the traditional notion of retirement to suit their lifestyle choices."
The multi-phased study, "Housing for the 55+ Market: Trends and Insights on Boomers and Beyond," examines a number of trends and behaviors of the important boomer segment and the population in general. The research, released during NAHB's Building for Boomers & Beyond: 50+ Housing Symposium in Philadelphia, includes an in-depth profile of the 55+market, based on figures from the U.S. Census Bureau's American Housing Survey from 2001 through 2007.
The study showed that the new homes offered to 55+ buyers and renters grew from an average of about 1,800 square feet to about 2,300 during that time period-likely still a downsize for many. Those who moved from their existing homes did so primarily for reasons relating to their families, but the design and look of the community, and the quality of the home, as well as the design and layout of the new residence, were the factors most often considered by those who chose to move.
The research showed that while most 55+ consumers prefer to stay in their current home as they age, an increasing number (3 percent, compared with 2.2 percent in 2001) will opt for an age-restricted community designed to attract "active adults" with a heavy emphasis on lifestyle. The research also noted that those who were residents of multifamily dwellings often sought less expensive homes. Of the Baby Boomers who are close to the traditional retirement age of 65, many are not yet planning to retire, are looking for a community close to their place of employment, or one that allows them to transition into a work-from-home situation. The number of people who chose a community close to work increased from 11.4 percent in 2001 to 16.6 percent in 2007.
SPRINGTHAW IN PRICES AND RATES, PLUS INCENTIVES DRAW HOME BUYERS
The frozen housing market appears to be thawing as more buyers are finding the current historically low interest rates, stabilizing prices and tax credit refund incentives irresistible.
"Today's market offers an incredible opportunity with the unprecedented combination of a 40-year low in interest rates, prices returning to normal levels in many markets, and limited-time tax incentives," says Joe Robson, NAHB chairman.
The number of homes under contract increased in March, according to the National Association of Realtors' Pending Home Sales Index, which increased 3.2 percent from February to March.
Optimism about the housing market is on the rise as well. An April 16 Gallup Poll found that 71 percent of Americans said that now is a "good time" to buy a house, an 18 point increase from one year ago and the highest level in four years.
PROFESSIONAL REMODELERS KEY TO HOMEOWNERTAX CREDITS
Homeowners can claim up to $1,500 in expanded energy-efficiency tax credits for remodeling their principal residences to reduce energy consumption. Available until the end of 2010, the revamped Existing Home Retrofit Tax Credit (25C) tax credit helps consumers save two ways: on their costs and on their utility bills.
"Remodelers can help find the best methods of saving energy in your home with an assessment, like a home energy audit," explains NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, CGP, a remodeler from Tucson, Ariz. "Tightening the house to reduce air leakage by adding insulation, fixing ducts and installing a more efficient heating and air conditioning system can help save on energy bills today while also reducing next year's tax bill."
The expanded federal tax credit refunds 30 percent of the product replacement cost up to a total of $1,500. It can be used not only for HVAC systems, insulation and water heaters but also for windows and doors and insulation as long as the new products meet IRS qualifications. In some cases, installation costs may also be used to claim the tax credit.
Home energy audits can cost as little as $500, which remodelers say is an expense that pays for itself--and more with savings from efficiency upgrades. And homeowners may be able to combine federal tax credits with local and regional incentives to maximize savings.
Inspecting the ductwork, caulking and heating and cooling systems for possible upgrades or enhancements can provide additional energy savings. Homeowners also can use the tax credit for heating and cooling components.
For example, upgrading a standard 10-year old air conditioner to today's federal minimum 13-SEER (Seasonal Energy Efficiency Ratio) model may cost about $5,500 in Phoenix, but does not qualify for the tax credit. Spending as little as $2,000 more for a higher-efficiency air-conditioner (such as 16-SEER) earns the homeowner the $1,500 energy-efficiency federal tax credit. Plus, the local power company provides a rebate starting at $425.With the tax credit and utility rebate, the cost difference can be paid back in a couple of years, while the homeowner may enjoy utility bills savings for years to come.
With the credit, tankless water heaters are comparable in cost to traditional gas water heaters but last as long as 20 years and are 30 percent more efficient, according to Eugene Lamana, residential business manager at Rinnai, a manufacturer of tankless water heaters and other gas appliances based in Peachtree City, Ga. Savings depend on local energy prices, but homeowners may also save with less frequent replacements.
"These are just some examples of how the energy-efficiency tax credit helps consumers save money in making home improvements and cutting down utility bills," says Miedema. "Homeowners should contact a professional remodeler near them for advice on installing tax credit-qualified improvements in their home."
Home owners can use an energy-savings simulation from the NAHB Research Center at www.energysim.toolbase.org to determine likely costs of upgrades and savings. Information on rebates from utility companies and other state and local government incentives is available at www.dsireusa.org.
For more information about the Existing Home Retrofit Tax Credit, visit www.nahb.org/efficiencytaxcredit.
BUCKEYE COMMUNITY HONORED AT BEST OF 50+ HOUSING AWARDS GALA
The National Association of Home Builders' 50+ Housing Council announced the winners for its 2009 Best of 50+ Housing Awards, which honor excellence and innovation in the design, development and marketing of housing for older consumers. The annual awards program, held during the Building for Boomers and Beyond: 50+ Housing Symposium, showcases the latest trends in housing for the mature market.
"This year's winners incorporated a high level of quality and lifestyle specific amenities to their projects," says Pat Kelley, a St. Louis builder and 2009 chair of NAHB's 50+ Housing Council. Among the honorees were two winning developments that featured designs and amenities, attuned to the needs and wants of today's 50+ resident. Entries represented a diverse range of projects including everything from a community with stunning Arizona mountain views to a luxury continuing care setting in Japan.
There were 41 projects that received a gold award and 39 silver winners. Heritage at Todd Creek, in Buckeye, Ariz., took the Gold award for Best Clubhouse at an Active Adult Community. This community of single-family homes creates a cohesive atmosphere with services and recreation for the residents. The clubhouse is the epicenter of social interaction and personal growth, featuring employment opportunities through ASU Lifelong Learning Academy, a cultural hall, computer lab, fitness center, and an arts and crafts room.
Beyond the clubhouse, the residents have access to a host of additional activities, such as an 18-hole golf course, swimming pools, volleyball, horseshoes, bocce ball courts, an outdoor amphitheater, a softball stadium, and the onsite restaurant, Indigo Grille.
