Spring 2024 Board of Directors Meeting Overview

Posted on April 2, 2024 by Mike Means

The OkHBA held its Spring Board of Directors meeting last week. Among the many items of business, the directors heard a report from the Oklahoma Housing Finance Authority about the Housing Stability Fund recently approved by the Oklahoma Legislature. The idea behind the fund is to not only increase housing, but especially in rural communities in Oklahoma.

One of the ways to entice builders to build in rural communities is zero percent (0%) construction loans for 24 months. To qualify a builder must supply 10% and build a minimum of 5 homes with a maximum of 25 homes. They can be on scattered sites – meaning a builder could build in surrounding rural communities. The construction loan must be repaid before submitting another application. 

While we would like to have seen some kind of partnership with those rural communities, such as in-fill lots at no cost or greatly reduced cost, there are some aspects of the program we like. The size of the homes are those we think typically are in the attainable range – 1,000 to 2,000 square feet.

There is also down payment assistance to the buyers via OHFA. They can qualify for a grant of 5% down payment assistance, but they must maintain their residency in the home for 3 years.

There is more to the program.  For more information, visit www.ohfa.org/housingstability.

Mike Means
OK Home Builders Assn

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Single-Family Home Building Set for Gains in 2024

Posted on March 20, 2024 by Mike Means

The article below is from the National Association of Home Builder's "Eye on the Economy".

Despite elevated interest rates, home builder sentiment and construction starts are showing the potential for housing sector growth in the coming months. In fact, the reason for recent increases for the 10-year Treasury rate, which is now hovering near 4.3%, is ongoing solid economic conditions. For example, in February, wages were 4.3% higher than a year ago and 275,000 jobs were created. The unemployment rate remains low at 3.9%, which is helping to support for-rent and for-sale housing growth.
Indeed, the moderately strong economic data are keeping upward pressure on what had been a declining trend for inflation. In February, the Consumer Price Index (CPI), the broadest measure of inflation, was up 3.2% from a year ago. While inflation data made progress in late 2022 and early 2023, the CPI has been in the 3% range since May 2023. The reason for the lingering and unfinished inflation challenge continues to be housing inflation, which is due to a lack of housing supply. The shelter inflation component of overall inflation was up 5.7% from a year ago. This is lower than at the start of the year, but for shelter to fall back to the inflation reported in the rest of the economy, additional home building will be required. 
Home construction continues to be challenged by supply-side issues. For example, gypsum pricing was up 3% in February, and concrete prices are up more than 7% from a year ago. Meanwhile, a shortage of skilled labor continues, with 413,000 open construction sector jobs. There were only 293,000 open jobs a year ago, a sign of ongoing growth for construction workers.
Despite these challenges, with the Fed expected to cut the short-term federal funds rate later this year, builders are anticipating more gains for building. The NAHB/Wells Fargo Housing Market Index (HMI) increased to a level of 51 in March. This was the first time HMI was above the break-even level of 50 since last July. Only 24% of builders reported using price cuts in March, which was the lowest share since last summer. 
Consistent with improving builder sentiment, housing starts expanded in February. Single-family starts increased 11.6% to a 1.13 million seasonally adjusted annual rate, up 35.2% compared to a year ago. The three-month moving average (a useful gauge, given the recent volatility) is up to over 1 million starts. The multifamily sector increased 8.3% to an annualized 392,000 pace for 2+ unit construction in February. However, multifamily construction is down 34.8% on a year-over-year basis, with additional declines expected ahead as housing supply for apartments increases later this year.

Dr. Robert Dietz
NAHB Chief Economist

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Solid Economic Data Indicate a Promising Outlook for Housing

Posted on February 21, 2024 by Mike Means

The following article was written by Robert Dietz, Chief Economist at the National Association of Home Builders.

The economy continues to post solid gains, leading the bond market to reverse earlier bets that the Federal Reserve would begin cutting the benchmark federal funds interest rate as early as March. Better-than-expected economic performance will reduce the rate of improvement for inflation data, meaning the Fed will need to maintain its long-stated monetary policy of higher rates for longer. In January, the Consumer Price Index increased by 3.1%, following a 3.4% increase in December. 

Improved expectations for macroeconomic conditions led the 10-year Treasury to test a 4.3% rate this week, after starting the year just below 3.8%. This has led the 30-year fixed-rate mortgage to rise, albeit by a smaller amount, from 6.6% to approximately 6.8% over the same period. Nonetheless, the NAHB forecast continues to call for mortgage rates to move moderately lower over the course of 2024 and 2025 before settling in the high-5% range. 

Ongoing elevated interest rates left the NAHB/Wells Fargo Housing Opportunity Index (HOI) at a 37.7 reading, meaning only 37.7% of new and existing home sales during the fourth quarter of 2023 were affordable for a median-income household. (This was the final edition of the HOI, which will be replaced in May by a new affordability index: the Cost of Housing Index.) The final read of the HOI was near a multi-decade low for housing affordability because of both high interest rates and limited housing inventory.

Despite the recent uptick for interest rates, a combination of several key factors — including expectations that mortgage rates will continue to moderate in the coming months, the prospect of future rate cuts by the Federal Reserve later this year, and a protracted lack of existing inventory — provided a boost to builder sentiment for the third straight month. Builder confidence in the market for newly built single-family homes climbed four points to 48 in February, according to the NAHB/Wells Fargo Housing Market Index. This is the highest level since August 2023, and it suggests gains for single-family starts ahead.

January construction data suggest competing directions for multifamily and single-family construction volume in 2024. For the first month of the year, single-family construction starts decreased 4.7% to an annual rate of 1 million. However, single-family starts are up 22% compared to a year ago, and single-family permits have increased 1.6% to an annual rate of 1.02 million — the highest since May 2022. Meanwhile, multifamily construction starts decreased 35.6% to an annualized 327,000 pace in January, and multifamily permits decreased 7.9% to an annualized 455,000 pace — their lowest since April 2020.

Residential building material costs may heat up in 2024 as single-family construction volume increases. The latest Producer Price Index indicated that prices of residential building materials increased 1.28% between December 2023 and January 2024. This was the largest monthly change for the index since March 2022.

Finally, new data indicate that the long-run demand for home construction may be larger than many analysts expect. The Congressional Budget Office released new 30-year population growth projections that include substantial upward revisions. The latest estimates include an additional 8.9 million people in 2053, a 2.4% increase from its previous forecast. A faster growing population will undoubtedly increase demand for housing (including both for-sale and for-rent multifamily and single-family), creating added pressure on the persistently underbuilt housing market.

Robert Dietz
NAHB Chief Economist

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A Business New Years’ Resolution

Posted on January 10, 2024 by Mike Means

Now that it’s a new year, and we all survived 2023, many of us have sat down to create New Years’ resolutions. Be it health, family, or business. We have all been around long enough to know that most don’t stick long-term, and unless we put the time in to create a smart, adequately researched, and timely plan, our chances for success drop significantly. 

That is why we formed our affinity partnership with Small Business Growth Partners (SBGP) and why an annual Business Plan of Actions (BPA) is included 100% with your HBA Member Benefits.  

SBGP is a private national coaching firm and specializes in working with construction and trade companies. Over 40% of the country’s Home Builders Associations from the NAHB work exclusively with SBGP, and we feel fortunate to be one of them. They understand the building industry and have helped thousands of construction & trade companies across the country.

Here are some of the most common results I’ve heard from members who implemented a BPA…

  • A significant increase in gross & net margins
  • Being able to breakthrough growth ceilings and achieve record volume numbers 
  • Creating clear roles and responsibilities between team members and stopping the blame game.
  • Getting teams on the same page with a simple and effective planning system.
  • Significant increases in sales conversion rates
  • Considerable increases in employee morale
  • Significantly reduced “firefighting” and getting pulled back into day-to-day operations

And most importantly, having substantially more money on the bottom line and truly feeling in control of your business.

If you have not yet taken advantage of this OKHBA Member Benefit, please do it now. 

Once again, a 2024 BPA is included 100% in your OKHBA Members Benefits.

To register for this member benefit, simply click here.

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Legislators Study Oklahoma Housing Shortage

Posted on November 16, 2023 by Mike Means

This article was taken from the The Journal Record.

OKLAHOMA CITY – Legislators on Tuesday received an update on the housing stability program and examined ways to further address the housing crisis in Oklahoma.

State Rep. Daniel Pae, R-Lawton, and state Rep. Forrest Bennett, D-Oklahoma City, organized the study to explore the development of and access to affordable housing. They say the Business and Commerce Committee study will help them determine how to direct their focus with legislation pertaining to this ongoing issue in next year’s legislative session.

“We’ve been working for the last several months with many stakeholders and partners in housing to try to identify opportunities for the state of Oklahoma to put ourselves on a good path when it comes to affordable housing and workforce housing,” Bennett said.

Program nears end of public comment period

The committee learned the latest on the development of a program designed to help address the long-standing housing shortage in Oklahoma.

The Oklahoma Legislature looks to build off momentum created from the passage of House Bill 1031X during the 2023 special session that ran concurrently with the regular session. The bill appropriated $215 million for the creation of the Oklahoma Housing Stability Program.

The Oklahoma Housing Finance Agency is the program administrator. Agency Housing Development Director Darrell Beavers said they split the state funds into three initiatives.

To continue reading this article, please click this link.

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3 Ways Home Builders Can Deliver a Personalized Experience for Home Buyers

Posted on October 9, 2023 by Mike Means

This is an article taken from The National Association of Home Builders website. To view the full article, read here.

Today’s home buyer doesn’t just want a personalized purchasing experience — they expect it. And the numbers speak for themselves:

  • 70% of buyers expect personalized interactions with businesses

  • 76% of customers get frustrated when companies don’t deliver personalized interactions

  • The fastest-growing companies drive 40% more revenue from personalization than their counterparts.

A home is arguably the most personal product in the world. So home builders must incorporate the right technology — like online buyer experiences and 3D visualizations — into their business to enable the personalized experience today’s home buyers want and expect.

By being authentic, understanding your audience, and embracing technology, you can enhance your brand and provide a personalized experience for customers – making you a builder of choice.

Use Human-Centric Messaging

People don’t just buy products; they are buying better versions of themselves. When a home builder can authentically help buyers see themselves living better lives and achieving their aspirations by engaging with their product, that product becomes more valuable and differentiated.

Prospective buyers are more likely to choose your brand over competitors when they see themselves in your product and story.

Close Sales through Personalization

What if you could bring the high-touch, personal experience buyers get in a Design Center right to the buyer’s home? And in doing so, speed up the sales cycle?

Giving buyers a level of control to make decisions about their home and visualize it in the process can empower them to truly build a home they love that fits their needs and preferences.

This personalization in the sales cycle doesn’t just benefit buyers. It also helps you as the home builder by easily increasing option take rates and earning more revenue in each transaction.

Check out this article to continue reading.

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