RubinBrown recently attended the mid-year board meeting of the National Association of Home Builders in Washington, D.C. The following are some highlights from the event:
Economic Outlook
- The HMI (Home Market Index), which measures how builders feel about sales and buyer traffic increased to 66 in May. It has now been over 50 for over 5 years.
- Single family starts, although currently down, are expected to be flat with 2018. Declining interest rates are expected to fuel a strong second half to 2019. 2020, as of now, is expected to be up slightly.
Builder Concerns
Labor, labor, labor, is a huge issue throughout the country. Trades reported with the biggest shortages in order:
- Carpenters – Rough
- Carpenters – Framing
- Carpenters – Finished
- Concrete Workers
- Brick Layers
Most significant concerns to builders in order (% reporting):
- Labor – 82%
- Building Material Prices – 69%
- Cost of Lots – 63%
- Negative Media Reporting making people cautious – 61%
All the talk with tariffs has the industry worried with potential higher material costs.
Did You Know?
- 25% of the current cost of housing is due to regulation costs
- Home builder sale prices have increased 40% since 2013
- Subcontractor labor costs were up 5.9% in 2018 and 7.2% in 2017
- The overall construction industry is currently 360,000 jobs short of capacity needs
- Housing affordability is also getting a lot of attention in Congress. Two concepts being discussed to improve affordability include the use of more subsidies and simplifying regulations that are impeding density.
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.