The Nail, December 2022

THE NAIL

The official magazine of Home Builders Association of Middle Tennessee President Nick Wisniewski

Vice President Brandon Rickman

Secretary/Treasurer Jim Hysen

Executive Vice President John Sheley

Editor and Designer Jim Argo Staff Connie Nicley Hannah Garrard

THE NAIL is published monthly by the Home Builders Association of Middle Tennessee, a non-profit trade association dedicated to promoting the American dream of homeownership to all residents of Middle Tennessee.

SUBMISSIONS: THE NAIL welcomes manuscripts and photos related to the Middle Tennessee housing industry for publication. Editor reserves the right to edit due to content and space limitations.

POSTMASTER: Please send address changes to: HBAMT, 9007 Overlook Boulevard, Brentwood, TN 37027. Phone: (615) 377-1055.

Installation & Awards Banquet sponsorships

There’s still time to sponsor the association’s biggest night of the year. Return your registration form to the HBAMT today.

ON THE COVER:

The Builders First Source sponsored Installation and Awards Banquet is set for Thursday, December 15th at the Omni Nashville Hotel. See page 11 (eleven) for your invitation and RSVP details. Then make sure to stop by the HBAMT Tuesday, December 20 between 3-5pm for the James Hardie sponsored Holiday Open House event. No RSVP required!

Single-family housing contraction continues in October

Elevated mortgage rates, high construc tion costs for concrete and other build ing materials and weakening demand stemming from deteriorating affordability conditions continue to act as a drag on sin gle-family housing production.

Overall housing starts decreased 4.2% to a seasonally adjusted annual rate of 1.43 million units in October, according to a report from the U.S. Department of Housing and Urban De velopment and the U.S. Census Bureau.

The October reading of 1.43 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall num ber, single-family starts decreased 6.1% to an 855,000 seasonally adjusted annual rate. Year-to-date, single-family starts are down 7.1%. The multifamily sector, which includes apartment buildings and condos, decreased 1.2% to an annualized 570,000 pace.

“Mirroring ongoing falloffs in builder sen timent, builders are slowing construction as demand retreats due to high mortgage rates,

Builders are slowing construction as demand retreats due to high mortgage rates, stubbornly elevated construction costs and declines for housing affordability.

stubbornly elevated construction costs and declines for housing affordability,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home build er and developer from Savannah, Ga.

“This will be the first year since 2011 to post a calendar year decline for single-family starts,” said NAHB Chief Economist Robert Dietz. “We are forecasting additional declines for single-family construction in 2023, which means economic slowing will expand from the residential construction market into the rest of the economy.”

On a regional and year-to-date basis, com bined single-family and multifamily starts are 2.9% higher in the Northeast, 1.5% lower in the Midwest, 2.6% higher in the South and 5.1% lower in the West.

Overall permits decreased 2.4% to a 1.53 million unit annualized rate in October. Sin gle-family permits decreased 3.6% to an 839,000 unit rate. Multifamily permits de creased 1.0% to an annualized 687,000 pace.

Looking at regional permit data on a yearto-date basis, permits are 2.8% lower in the Northeast, 0.2% higher in the Midwest, 1.1% higher in the South and 4.0% lower in the West.

Multifamily units under construction climbed again in October to 928,000, the highest tally since December 1973. n

Housing affordability falls to more than ten year low

Housing affordability fell to its lowest level since the NAHB began track ing it on a consistent basis in 2012 as rising mortgage rates, ongoing building ma terial supply chain disruptions, high inflation and elevated home prices pushed the housing market into a recession. And with mortgage rates moving even higher in the fall, afford ability conditions are expected to further de teriorate through the end of the year.

According to the NAHB/Wells Fargo Housing Opportunity Index (HOI), just 42.2% of new and existing homes sold between the beginning of July and end of September were affordable to families earning the U.S. medi an income of $90,000. This marks the second consecutive quarterly record low for housing affordability since the Great Recession, trail ing the previous mark of 42.8% set in the sec ond quarter.

“The housing market and affordabili ty conditions have continued to weaken throughout the year as rising mortgage rates, supply chain bottlenecks and a lack of skilled construction workers continue to push hous ing costs higher,” said NAHB Chairman Jerry Konter. “Entry-level buyers are particularly hurt, as more of them are getting priced out

of the market.”

“Builder sentiment has declined 10 straight months and worsening affordability condi tions remain a top concern as single-family production continues to decline and buyers pull back because of rising interest rates,” said NAHB Chief Economist Robert Dietz. “The best way to reduce housing costs is to boost supply. Policymakers must prioritize fixing building material supply chains and easing excessive regulations to help bring down construction costs and enable home builders to increase housing production.”

While the HOI shows that the national me dian home price fell to $380,000 in the third quarter, it is still the second-highest median price in the history of the series, after the $390,000 recorded in the previous quarter. Meanwhile, average mortgage rates reached a series high of 5.72% in the third quarter, up from 5.33% a quarter earlier. Looking ahead, affordability will continue to weaken, as Fred die Mac reports that at the end of October, the 30-year fixed-rate mortgage surpassed 7% for the first time since April 2002. n

Builder confidence declines for eleventh consecutive month

Elevated interest rates, stubbornly high building material costs and declining affordability conditions that are pushing more buyers to the sidelines continue to drag down builder sentiment.

Builder confidence in the market for new ly built single-family homes posted its 11th straight monthly decline in November, dropping five points to 33, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today. This is the lowest confidence reading since June 2012, with the exception of the onset of the pandemic in the spring of 2020.

“Higher interest rates have significantly weak ened demand for new homes as buyer traffic is be coming increasingly scarce,” said NAHB Chair man Jerry Konter. “With the housing sector in a recession, the Biden administration and new Con gress must turn their focus to policies that lower the cost of building and allow the nation’s home builders to expand housing production.”

To bring more buyers into the marketplace, 59% of builders report using incentives, with a big increase in usage from September to November. For example, in November, 25% of builders say

they are paying points for buyers, up from 13% in September. Mortgage rate buy-downs rose from 19% to 27% over the same time frame. And 37% of builders cut prices in November, up from 26% in September, with an average price of reduction of 6%. This is still far below the 10%-12% price cuts seen during the Great Recession in 2008.

“Even as home prices moderate, building costs, labor and materials -- particularly for concrete -- have yet to follow,” NAHB Chief Economist Robert Dietz. “To ease the worsen ing housing affordability crisis, policymakers must seek solutions that create more affordable and attainable housing. With inflation showing signs of moderating, this includes a reduction in the pace of the Federal Reserve’s rate hikes and reducing regulatory costs associated with land development and home construction.”

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI 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 three HMI components posted declines in November. Current sales conditions fell six points to 39, sales expectations in the next six months declined four points to 31 and traffic of prospective buyers fell five points to 20.

Looking at the three-month moving aver ages for regional HMI scores, the Northeast fell six points to 41, the Midwest dropped two points to 38, the South fell seven points to 42 and the West posted a five-point decline to 29.HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS (former ly housingeconomics.com). n

GENERAL

Chili Cook-Off & Election Winners!

The HBAMT’s Annual Chili Cook-off was held last night in con junction with the 2023 General Elections. The event enjoyed a large attendance of association members and friends who enjoyed the festivities and voted for next year’s leadership, as well as their favorite chili dishes.

An expert panel determined the top three teams awarded. First place honors went to the “Red Hot Chili Experts” team from Tolbert Marketing & Events. Second place went to the “Tennessee’s Best Chili” team from Tennessee Valley Homes. And third place was awarded to the “Regent Reapers” team from Regent Homes.

Jimmy Franks and the Tennessee Valley Homes team also took home the People’s Choice Award, determined by ballots cast by event attendees.

HBAMT Election winners who will be sworn in during the Installa

tion and Awards Banquet (see page eleven) included the following:

President: Brandon Rickman

Vice President: Jim Hysen

Secretary/Treasurer: Kelly Beasley

Local Directors: Randy Arnold, John Beyer, Scott Ghertner, Rachel Holloway, Lauren Pennington, Perry Pratt, Ted Pratt, Chris Smith, and Kevin Sturgill.

State Directors: Kelly Beasley, Jordan Clark, Scott Ghertner, Jim Hysen, Eli Routh, and Steve Shalibo.

National Directors: Jordan Clark, Jimmy Franks, Trey Lewis, Eli Routh, Randall Smith, and Nick Wisniewski.

Congratulations to all of the big winners during the evening! n

Margaret Tolbert and Kimber Beeler, first place winners from Tolbert Marketing & Events.

Jimmy Franks and the Tennessee Valley Homes team took home second place and the People’s Choice Award.

David McGowan and John Giovannetti, third place winners from the Regent Homes team.

FRANKLIN KITCHEN CENTER

DIXIE EARTH MOVERS

CHAPTERS

CHEATHAM COUNTY CHAPTER

Chapter President - Roy Miles: 615/646-3303

Cheatham County Chapter details are being planned. Next meeting: to be announced.

Chapter RSVP Line: 615/377-9651, ext. 310

DICKSON COUNTY CHAPTER

Chapter President - Mark Denney: 615/446-2873.

The Dickson County Chapter meets on the third Monday of the month, 12:00 p.m. at Colton’s Steakhouse in Dickson. Next meeting: to be announced.

Price: FREE, lunch dutch treat.

Chapter RSVP Line: 615/377-9651, ext. 264

MAURY COUNTY CHAPTER

Chapter President - Kelly Beasley.

Maury County Chapter details are currently being planned. Next meeting: to be announced.

Chapter RSVP line: 615-377-9651, ext. 312; for callers outside the 615 area code, 1-800-571-9995, ext. 312

METRO/NASHVILLE CHAPTER

Chapter President - Tonya Esquibel

The Metro/Nashville Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices.

Next meeting: to be announced.

Topic: to be announced.

Price: to be announced.

RSVP to: cnicley@hbamt.org

ROBERTSON COUNTY CHAPTER

Next meeting: to be announced.

Robertson County RSVP line: 615-377-9651, ext. 313.

SUMNER COUNTY CHAPTER

Chapter President - Joe Dalton: 615/972-7149

The Sumner County Chapter meets on the fourth Tuesday of the month, 11:30 a.m. at the new Hendersonville Library.

Next meeting: to be announced.

Chapter RSVP Line: 615/377-9651, ext. 262

WILLIAMSON COUNTY CHAPTER

Chapter President - John Nehrenz

The Williamson County Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices.

Next meeting: to be announced.

Builders Free pending sponsorship.

Price: $10 per person with RSVP ($20 w/o RSVP). Chapter RSVP Line: 615/377-9651, ext. 305

WILSON COUNTY CHAPTER

Chapter President - Margaret Tolbert

The Wilson County Chapter meets on the second Thursday of the month, 9:00 a.m. at the Mt. Juliet Chamber of Com merce: 2055 N. Mt. Juliet Road, #200 - 37122.

Next meeting: to be announced.

Topic: to be announced.

HBAMT members free pending sponsorship RSVP to: cnicley@hbamt.org

COUNCILS

HBAMT REMODELERS COUNCIL

Council President - Eli Routh.

The HBAMT Remodelers Council meets at varying

locations throughout the year.

Next meeting: to be announced.

Topic: to be announced.

Council RSVP Line: 615/377-9651, ext. 263 RSVP to: cnicley@hbamt.org

INFILL BUILDERS COUNCIL

The Infill Builders Council typically meets on the third Thursday of the month, 11:30 a.m. at the HBAMT offices

Next meeting: to be announced. Price: to be announced.

RSVP to: 615/377-9651, ext. 265.

MIDDLE TENN SALES & MARKETING COUNCIL

Council President - Lisa Underwood.

The SMC typically meets on the first Thursday of the month, 9:00 a.m. at the HBAMT offices.

Next meeting and topic: Thursday, January 5th.

Topic: to be announced.

SMC members free pending sponsorship; non-SMC members $20 w/RSVP, $25 w/o RSVP

RSVP to: cnicley@hbamt.org

Builders First Source Installation Banquet

James Hardie Holiday Open House