Housing Figures: Construction Costs Rise for Home Builders
March 10, 2020
Housing Figures is our monthly round-up of the top news stories related to residential new construction spending and the latest market numbers.
In this round-up, we learned that the costs of construction increased for home builders, while at the same time, the purchase of new homes have rebounded to 2007 rates. We’re also looking at what it takes to own a home in the country’s largest markets.
Costs of construction rose from 2017. More than 60 percent of a home’s sales price goes to construction costs according to NAHB’s latest Cost of Construction Survey. That number is up from 55.6 percent in 2017, but is similar to their 2013 and 2015 breakdowns of 61.7 and 61.8 percent, respectively. Interior finishes accounted for the largest share of construction costs. [NAHB Now]
Construction employment increased in February. Construction jobs increased by 42,000 in February and by 223,000 (or three percent) over the past year according to the Associated General Contractors of America. Officials suggested the gains were partly due to mild winter weather across the country, in addition to strong demand for construction services. [Building Design+Construction]
Homeowners need to make $68,440 or more in large U.S. markets. SmartAsset looked at the salaries homeowners need to make to afford a home in the nation’s largest 15 markets. While the average was $68,440, the salaries vary widely. In San Francisco, homeowners have to make at least $184,000. In Philadelphia, homeowners would need to make $60,786. [HousingWire]
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Home prices rose in January. CoreLogic’s latest Home Price Index and HPI Forecast showed home prices rose nationally by four percent from January 2019. Their forecast indicates annual price growth between January 2020 and 2021 will be 5.4 percent. [Builder]
Purchases of new homes rebounded to 2007 rates. The latest update from the U.S. Department of Housing and Urban Development indicates that the purchase of new, single-family homes climbed 7.9 percent in January. That’s 764,000 units (SAAR), up 18.6 percent from January 2019. Purchases were up in all regions except the south. [HUD]
The housing market is missing 3.3. million homes. The U.S. housing market is undersupplied by 3.3 million homes according to Freddie Mac. The shortage is increasing by about 300,000 units a year, and Oregon is the most under-supplied state. Other states with shortages include Colorado, Florida and California. [HousingWire]