RubinBrown recently attended the fall leadership meeting of the National Association of Home Builders in New Orleans. The following are some highlights:
- The HMI (Home Market Index), which measures how builders feel about sales and buyer traffic, has jumped to 71. This is one of the highest levels since the recovery.
- Single-family sales are up 6% in 2019 and are expected to be flat in 2020.
- NAHB expects two more interest rate cuts in the next few months, which will continue to fuel new home sales.
- Shortage of labor continues to be the #1 major concern in the industry. An aging work force operating at full capacity is limiting the number of homes that can be built... everywhere...
- There are currently 380,000 open jobs in the construction industry. Immigrants make up 24.4% of the workforce, women 9%.
Early Results of Tax Reform
NAHB has done a detailed study of recent tax reform based on 2018 tax returns filed through July 2019. The results are interesting:
Did You Know?
- The $10,000 limit on state and local tax that can be deducted has done little to slow sales in states most effected (east and west coast). The amount of people subjected to AMT seems to have offset the loss of the deduction.
- The mortgage interest deduction is only being used by less than 30% of taxpayers... primarily as a result of the increase in the standard deduction to $24,000. NAHB is analyzing the benefit of a home mortgage tax credit as a means to incentivize ownership.
- The 199(A) deduction (20% of qualified business income) is being taken largely (80%) by taxpayers earning over $250,000.
- Affordability continues to be a huge issue... it is estimated only 61% of people can afford a home.
- NAHB estimates recent tariffs have added $1,000 to each house.
Readers should not act upon information presented without individual professional consultation.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
All Construction News Construction Overview