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Tag: National Association of Home Builders

  • Housing trends in 2026: What builders are seeing – Houston Agent Magazine

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    Affordability continues to be a challenge in housing, and a new report from the National Association of Home Builders shows how that’s influencing both buyers and builders in 2026. 

    Home prices have climbed much faster than incomes over the last several years, up roughly 53% since 2019 compared with about a 24% increase in median household income.  

    First-time homebuyers make up a much smaller share of the market than in the past. In 2025, they represented just about 21% of buyers, down from 44% in 1981, and the median age for first‑timers has climbed to 40. 

    Social and household patterns are shifting too. More young adults ages 18–24 are living with their parents, fewer couples have children, and more people are choosing to live alone. These demographic trends are part of why builders are adjusting what they put into new homes. 

    “You can’t have housing prices rise that significantly for a sustained period of time and not experience housing affordability issues,” said Rose Quint, NAHB assistant vice president of survey research. “Clearly this will have implications on the size of homes we build and the types of amenities we include.” 

    In terms of house design, the median home size hasn’t changed much recently, but builders are adding features buyers care about. That includes flexible spaces like drop zones and multi‑purpose rooms and more homes with electric vehicle charging stations. 

    Builders are also trying different ways to address affordability. Sixty-seven percent are offering sales incentives, and roughly 41% have cut home prices compared with past years. 

    What buyers want varies by price point, according to the report. Entry‑level buyers tend to focus on value and practical layout needs, while higher‑end buyers often look for extra bedrooms and bathrooms, home offices, energy‑efficient features and community amenities. 

    Across income levels, outdoor space keeps coming up as something everyone values. Builders are finding creative ways to include patios, rooftop decks or other outdoor living areas, even in smaller homes. 

    There’s also movement toward offering a broader mix of housing types. Developers are looking at adaptive reuse projects and mixed‑density communities with townhomes or condos to give buyers more options. 

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    Jacqui Mueller

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  • 2026 opens with a dip in builder confidence, interest rates  – Houston Agent Magazine

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    Homebuilder confidence started the new year on a soft note, as buyers remained constrained by affordability issues despite mortgage rates hitting a three-year low.   

    Builder confidence in the market for newly built single-family homes slid to 37 in January, down two points from December, the National Association of Home Builders reported, citing the NAHB/Wells Fargo Housing Market Index (HMI).  

    “While the upper end of the housing market is holding steady, affordability conditions are taking a toll on the lower and mid-range sectors,” said NAHB Chairman Buddy Hughes, a homebuilder and developer from Lexington, North Carolina. “Buyers are concerned about high home prices and mortgage rates, with downpayments particularly challenging given elevated price-to-income ratios.” 

    On a positive note, the average 30-year mortgage rate fell to 6.06% as of Jan. 15, its lowest rate in three years and almost 1% below the same period last year, NAHB Chief Economist Robert Dietz said. 

    Most responses to the homebuilder survey were received before the announcement that Fannie Mae and Freddie Mac would purchase $200 billion of mortgage-backed securities in an effort to further trim borrowing costs, NAHB noted. 

    The HMI gauging future sales expectations fell three points to 49, while the component measuring current sales conditions fell one point to 41, and the index charting prospective-buyer traffic fell three points to 23.   

     “The future sales component of the HMI dipped below 50 for the first time since September, indicating that builders continue to face several issues that include labor and lot shortages as well as elevated regulatory and material costs,” Dietz said. 

    The survey also found that 40% of respondents reported cutting prices in January, the same level as December. This marks the third consecutive month since May 2020 that the share has been 40% or higher, NAHB said. The average price reduction rose to 6% from 5% in December, while the use of sales incentives was 65%, the 10th consecutive month above 60%. 

    Regionally, the three-month averages for the HMI scores were mixed, with the Midwest flat at 43, the Northeast dropping two points to 45, the South sliding a point to 35, and the West rising one point to 35.    

    Each month, NAHB/Wells Fargo surveys builders, asking them to rate single-family home sales over the next six months as good, fair or poor. It also asks builders to rate traffic of prospective homebuyers as “high to very high,” “average” or “low to very low.” Scores are then calculated, and any number above 50 indicates that more builders view market conditions as good/high than poor/low. 

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    John Yellig

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  • Housing industry urges Powell to stop raising interest rates or risk an economic hard landing

    Housing industry urges Powell to stop raising interest rates or risk an economic hard landing

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    New homes under construction in Miami, Florida, Sept. 22, 2023.

    Joe Raedle | Getty Images

    Top real estate and banking officials are calling on the Federal Reserve to stop raising interest rates as the industry suffers through surging housing costs and a “historic shortage” of available homes for sale.

    In a letter Monday addressed to the Fed Board of Governors and Chair Jerome Powell, the officials voiced their worries about the direction of monetary policy and the impact it is having on the beleaguered real estate market.

    The National Association of Home Builders, the Mortgage Bankers Association and the National Association of Realtors said they wrote the letter “to convey profound concern shared
    among our collective memberships that ongoing market uncertainty about the Fed’s rate path is contributing to recent interest rate hikes and volatility.”

    The groups ask the Fed not to “contemplate further rate hikes” and not to actively sell its holdings of mortgage securities at least until the housing market has stabilized.

    “We urge the Fed to take these simple steps to ensure that this sector does not precipitate the hard landing the Fed has tried so hard to avoid,” the group said.

    The letter comes as the Fed is weighing how it should proceed with monetary policy after raising its key borrowing rate 11 times since March 2022.

    In recent days, several officials have noted that the central bank could be in a position to hold off on further increases as it assesses the impact the previous ones have had on various parts of the economy. However, there appears to be little appetite for easing, with the benchmark fed funds rate now pegged in a range between 5.25%-5.5%, its highest in some 22 years.

    At the same time, the housing market is suffering through constrained inventory levels, prices that have jumped nearly 30% since the early days of the Covid pandemic and sales volumes that are off more than 15% from a year ago.

    The letter notes that the rate hikes have “exacerbated housing affordability and created additional disruptions for a real estate market that is already straining to adjust to a dramatic pullback in both mortgage origination and home sale volume. These market challenges occur amidst a historic shortage of attainable housing.”

    At recent meetings, Powell has acknowledged dislocations in the housing market. During his July news conference, the chair noted “this will take some time to work through. Hopefully, more supply comes on line.”

    The average 30-year mortgage rate is now just shy of 8%, according to Bankrate, while the average home price has climbed to $407,100, with available inventory at the equivalent of 3.3 months. NAR officials estimate that inventory would need to double to bring down prices.

    “The speed and magnitude of these rate increases, and resulting dislocation in our industry, is painful and unprecedented in the absence of larger economic turmoil,” the letter said.

    The groups also point out that spreads between the 30-year mortgage rate and the 10-year Treasury yield are at historically high levels, while shelter costs are a principal driver for increases in the consumer price index inflation gauge.

    As part of an effort to reduce its bond holdings, the Fed has reduced its mortgage holdings by nearly $230 billion since June 2022. However, it has done so through passively allowing maturing bonds to roll off its balance sheet, rather than reinvesting. There has been some concern that the Fed might get more aggressive and start actively selling its mortgage-backed securities holdings into the market, though no plans to do so have been announced.

    The Fed doesn't have to keep threatening hikes, says Fundstrat Co-Founder Tom Lee

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  • Teardowns Growing Part Of New Home Building Landscape

    Teardowns Growing Part Of New Home Building Landscape

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    If given their druthers, many home buyers would prefer a home in an established old-line city or suburban neighborhood. These enclaves are often “close-in” to the metro’s hub, offer charming vintage homes, and exist under green canopies of mature trees.

    Considering all the technological advancements that have come to homes and home building in recent years, many home buyers would also favor a brand-new house. The bells and whistles can make life considerably more enjoyable, convenient and secure.

    But established districts tend to be filled with old residences, and brand-new homes tend to be situated in brand-new neighborhoods. The exception? New infill homes built in old-line enclaves. These residences give buyers the marriage they desire of vintage and modern.

    Infill house construction is the forte of builders whose businesses find undeveloped parcels between existing structures and build new homes upon them. They are also the focus of builders specializing in teardown-rebuilds. Examples include builders like Portland’s Hamish Murray Construction Inc., the St. Louis area’s Superior Home Solutions and Aliso Viejo, Calif.-based Thomas James Homes.

    Growing challenges

    Several months ago, a National Association of Home Builders (NAHB) report found in 2021, nine percent of new homes resulted from teardowns.

    On the high end, about one in five (20.1%) of new homes result from teardowns in the Pacific region, made up of California, Oregon, Washington, Alaska and Hawaii. On the low end, about 3.8% in the West South Central region of Texas, Oklahoma and Louisiana are new homes built on the sites of houses that fell to the wrecking ball.

    Older, established neighborhood infill development that doesn’t require demolishing existing dwellings is roughly twice as commonplace as teardown-rebuilds.

    But the NAHB acknowledges teardowns are an increasing part of the U.S. home-building market, due to growing hurdles in locating undeveloped parcels. An NAHB survey in late 2021 found 76 percent of new home builders say the overall supply of lots in their regions is low to very low.

    That percentage has steadily risen virtually year after year since 2013, and easily beat the previous record of 65% set in 2018.

    Touting advantages

    Among marketing strong points of builders performing teardowns is the offer of new homes in buyers’ preferred neighborhoods, in contrast to renovating an existing house in the desired area to bring it up to the level of today’s expectations.

    “In the repair and remodel world, there is always a sacrifice,” says Tommy Beadel, co-founder and CEO of Thomas James Homes, which builds residences in California, the Pacific Northwest, Colorado and Arizona. “You may get the home where you want it, but then you end up fixing the parts that don’t meet your standards. Buyers want the ease of access to what they want and that it is at market value.”

    The teardown-rebuild model allows buyers to move to communities where new home construction ended decades earlier and no more lots exist. In such settings, the growing pains of the neighborhood are long past, and long-standing services and institutions are in place to serve residents.

    “There is a scarcity of product and no more land to build on within these top markets,” Beadel says. “Thomas James Homes is in the markets where the average age of housing is 80-plus years, and the only viable solution is through teardown building. Teardown building allows homeowners to pick exactly where they want to be. When rebuilding an individual home, owners have the option to stay exactly where they are or pick the location where they want to be.”

    The volume of teardowns has increased at a rapid rate over the past decade in places as diverse as suburban Detroit, Montclair, N.J., Nashville, Chicago’s Near Northwest Side and Vancouver, B.C. As some have said, teardowns are the inevitable byproduct of the appeal of vintage communities on one hand, and the attractiveness of new home products and technology on the other.

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    Jeffrey Steele, Contributor

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