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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In September, Catherine Koh dived into data on the homeownership rate of various household types including married couples with children, married couples with no children, single parents, and others.
The homeownership rate for multigenerational households increased by 4.9 percentage points (pp) over the last decade, but there’s another household type that experienced an even larger increase in the homeownership rate over the same period—single parent households.
In further analysis of the Census’s American Community Survey (ACS) data, NAHB dives deeper into the homeownership rate for other family household types: married couples with no children, married couples with children and single parent households. In 2022, most family households were married with no children (44%), followed by married with children (26%), single parents (12%), others (12%), and multigenerational families (6%). This composition has not changed much, with the exception of a gradual decrease in the share of married with children and single parent households, which is offset by an increase in the share of married with no children households.
The homeownership rate for single parent households saw the largest gains in homeownership rate with an increase of 5.7 percentage points over the decade. However, the overall level of homeownership rate for single parent households remains the lowest among all other family household types at just 41%. Another group that saw a large increase was the married couple with children households, with a 4.5% increase over the decade from 73% to 78%. Like multigenerational households, these increases were spurred on by historically low mortgage rates in 2021.
The only household type to have plateaued was married without children. As a matter of fact, these households saw decreasing homeownership rates for a few years before creeping back up to be at roughly the same rate as they were ten years ago at 84%. Nonetheless, married without children households remain as the group with the highest homeownership rate with an average rate of 84% over the decade.
We also examined the estimated home price-to-income ratio (HPI) for various household types. To calculate the home prices for recent homebuyers we used the median property value for owners who moved into their property within the past year. Here is where we see the effect of how multigenerational households were able to lower their HPI with pooled income and budgets. In contrast are single parent households with their estimated home prices approaching five times their income, indicating that these households are significantly burdened by housing costs.
Given that homeownership rates jumped in recent years for most household types despite increases in home prices suggests that the low mortgage rates in 2021 made steep home prices more palatable for homebuyers to enter the market. However, it is unlikely that we’ll see a continued increase in homeownership while mortgage rates remain elevated.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In April, Eric Lynch examined various macroeconomic and housing finance components and their responsiveness to changes in the federal funds rate.
As economist Milton Friedman once quipped, monetary policy has a history of operating with “long and variable lags.”[1] What Friedman was expressing is that it takes some time for the true effects of monetary policy, like the changing of the federal funds rate, to permeate completely through the larger economy. While some industries, like housing, are extremely rate-sensitive, there are others that are less so. Given the current inflation challenge, the question then becomes: how does monetary policy affect inflation across a diverse economy like the United States?
This was the question that Leila Bengali and Zoe Arnaut, researchers at the Federal Reserve Board of San Francisco (FSBSF), asked in a recent FSBSF economic letter article, “How Quickly Do Prices Response to Monetary Policy” [2]. The economists examined which components that make up the Personal Consumption Expenditures (PCE) Index[3], an inflation measurement produced by the Bureau of Economic Analysis (BEA), are the most and least responsive to changes in the federal funds rate. While the Federal Reserve makes decisions “based on the totality of the incoming data”[4] including the more popular Consumer Price Index (CPI)[5] produced by the Bureau of Labor Statistics (BLS), their preferred inflation measure is PCE. This is the reason why the researchers focused on this specific index.
Figure 1 represents how selected components would be affected over a four-year period if the federal funds rate increased by one percentage point.[6] The color of the bars is separated using the median cumulative percent price decline over this period: blue is the top 50% of all declines, while red is the bottom 50%.
Both housing components (owner and renter) are classified in red or ‘least-responsive’, which might appear to be counterintuitive given how the latest tightening cycle starting in early 2022 has affected the residential industry. The NAHB/Wells Fargo Housing Market Index (HMI) declined every month in 2022, mortgage rates rose almost to 8%, and existing home sales fell to historically low levels. However, as the shelter component of CPI remains elevated, this less than expected responsive nature of housing could partially explain why the dramatic increase in the federal funds rate has yet to push this part of inflation down further compared to other categories.
Figure 2 illustrates this point by showing both groups along with headline PCE inflation with their respective year-over-year changes since 2019. The blue shaded area is when the Federal Reserve lowered the federal funds rate, while the yellow vertical line is where the Fed started the most recent tightening cycle.
The most responsive grouping (as defined by Figure 1 above) has experienced greater volatility than the least responsive grouping over this period. Especially as home prices have experienced minimal declines, this would provide further evidence for the housing components of inflation (i.e., prices) being somewhat less responsive to monetary policy. It is important to note that this does not suggest that the overall housing industry is not interest rate sensitive, but rather, that other sectors like the financial sectors responded faster.
However, and NAHB has stated this repeatedly, this “less” than expected response for housing is a function of the microeconomic situation that housing is experiencing. Shelter inflation is elevated and slow to respond to tightening conditions because higher housing costs are due to more than simply macroeconomic and monetary policy conditions. In fact, the dominant and persistent characteristic of the housing market is a lack of supply. Also, higher interest rates hurt the ability of the home building sector to provide more supply and tame shelter inflation, by increasing the cost of financing of land development and residential construction. This may be the reason for the somewhat counterintuitive findings of the Fed researchers.
The Federal Reserve has a dual mandate[7] given by Congress, which instructs them to achieve price stability (i.e., controlling inflation) and maximize sustainable employment (i.e., controlling unemployment). To accomplish the first part, the Federal Reserve has targeted an annual rate of inflation at 2%. As Figure 2 showcases, while the headline PCE remains above this target, the most responsive grouping of PCE is, in fact, below 2% and has been for many months. This leads one to conclude that what is preventing the Federal Reserve from achieving its desired inflation target is due to the least responsive components of the index.
Figure 3 details this case with the bars representing the contributions of the two groupings (most and least responsive) to headline PCE inflation and the yellow line is the federal funds rate. The researchers were able to draw two conclusions from this chart:
“[The] rate cuts from 2019 to early 2020 could have contributed upward price pressures starting in mid- to late 2020 and thus could explain some of the rise in inflation over this period.”
“The tightening cycle that began in March 2022 likely started putting downward pressure on prices in mid-2023 and will continue to do so in the near term.”
Nevertheless, even though there are some who suggest that these monetary policy lags have shortened[8], the researchers do not believe that the drop in inflation after the first rate hike in early-2022 was a direct effect of this policy action.
As evident by Figure 3, the fight to get inflation down to target is going to be much harder moving forward, especially given housing’s least responsive nature. As the researchers concluded, “[even] though inflation in the least responsive categories may come down because of other economic forces, less inflation is currently coming from categories that are most responsive to monetary policy, perhaps limiting policy impacts going forward.”
The Federal Reserve will have to weigh this question as 2024 continues: what are the trade-offs for reaching their inflation rate target to the larger economy if the remaining contributors of inflation are the least responsive to their policy actions?
More fundamentally, if housing (i.e., shelter inflation) is not responding as expected by the academic models, policymakers at the Fed (and more critically policymakers at the state and local level with direct control over issues like land development, zoning and home building) should define, communicate, and enact ways to permit additional housing supply to tackle the persistent sources of U.S. inflation – shelter.
The opinions expressed in this article do not necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System.
Notes:
[1] https://www.marketplace.org/2023/07/24/milton-friedmans-long-and-variable-lag-explained/#:~:text=long%20and%20variable%20lag.
[2] Bengali, L., & Arnaut, Z. (2024, April 8). How Quickly Do Prices Respond to Monetary Policy? Federal Reserve Bank of San Francisco.
[6] Specifically, the researchers used a statistical model called vector autoregression (VAR) which examines the relationship of multiple variables over time. As a result, VAR models can produce what are known as impulse response functions (IRF) which can show how one variable (prices) responds to a shock from another (federal funds rate). Figure 1 is the cumulative effect (i.e., adding all four individual year effects together) of this process.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In May, Rose Quint shared key takeaways of NAHB’s study of home buyers.
High mortgage rates and double-digit growth in home prices since COVID-19 have brought housing affordability to its lowest level in more than a decade. Given this reality, a recent NAHB study on housing preferences* asked home buyers about which specific compromises they would be willing to make to achieve homeownership.
For 39% of buyers, accepting a smaller lot is the path to affording a home. This finding highlights the paramount importance of reforming zoning laws that mandate lot sizes, as nearly 4 out of 10 buyers would be willing to give up land in exchange for owning a home. For 36% of buyers, accepting fewer exterior amenities is the way to homeownership—they will simply add that deck or patio at some point in the future. Another 36% were willing to move farther from the urban core and 35% will accept a smaller house if that’s what it takes to buy it.
But what areas of the home, specifically, should shrink to reduce the overall footprint of the home? Most buyers who will take the smaller house compromise sent builders and architects a clear message: shrink the home office (53%) and the dining room (52%) to save on square footage. Also, loud and clear in the message: leave the kitchen (only 21% would want that smaller) and closet space (22%) alone.
* What Home Buyers Really Want, 2024 Edition sheds light on the housing preferences of the typical home buyer and is based on a national survey of more than 3,000 recent and prospective home buyers. Because of the inherent diversity in buyer backgrounds, the study provides granular specificity based on demographic factors such as generation, geographic location, race/ethnicity, income, and price point.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In March, Jing Fu compared homeowners and renters’ major assets, debt and net worth, as well as differences between age groups.
As examined in a previous post, homeownership plays an integral role in a household’s accumulation of wealth. This article further discusses the role of homeownership and examines the difference between homeowner and renter household balance sheets across assets, debt, and net worth.
Households who own a primary residence (homeowners) build primary residence equity, while renters have zero residence equity. In the third quarter of 2023, CoreLogic’s homeowner report analysis detailed that U.S. homeowners with mortgages have seen their equity increase by a total of $1.1 trillion, a gain of 6.8% from the same period in 2022. In addition to primary residence equity, households who own a primary residence almost always own other assets as well.
In contrast, households who do not own a primary residence (renters) neither accumulate wealth from home price appreciation, nor do they benefit from primary residence equity gains by paying down a home mortgage. Moreover, renters typically own a much smaller amount of other assets in aggregate than homeowners.
Both home equity and non-residence equity account for the wealth gap between homeowners and renters. It is useful to keep in mind that almost all households will spend time as a renter and time as an owner. Prior NAHB analysis1 indicates about 9 out of 10 households will be homeowners during some period of their lifetime. As such, while homeownership is key pathway for wealth accumulation, the rental market plays a role in this process as well, as most households will rent before they own a home.
ASSETS:
In 2022, while almost every family owned some assets, homeowners own the vast majority of assets in aggregate. An analysis of the Survey of Consumer Finances (SCF) suggests that the households who owned a primary residence own most other assets in sum, such as other residential real estate2, vehicles, other non-financial assets3, business interests, stocks and bonds, retirement accounts, and other financial assets4. This is shown in Table 1 below.
In contrast, renters who do not own a primary residence do not own as many other assets as homeowners. For example, in aggregate, homeowners owned 16 times more stocks and bonds than renters, 15 times more business interests and retirement accounts than renters.
Table 2 presents median values of assets, debt, and net worth for all these homeowners and renters by age categories in 2022. Homeownership and housing wealth are strongly associated with age. The median value of the primary residence rose for homeowners aged between 35 and 44, reached the peak for homeowners aged 45 and 54, before declining for those aged 55 and above. Meanwhile, the median value of homeowners’ other financial assets continued to rise across these age categories. The median value of retirement accounts increased to $65,000 for homeowners aged between 45 and 54 and decreased as age increased.
At the same time, the median value of business interests, other non-financial assets, and stocks and bonds among homeowners remained zero, indicating that fewer than half of homeowners own these assets at any age cohort. While Table 1 suggests that the owners of these assets are more likely to be homeowners, Table 2 indicates that a minority of homeowners own such assets. However, among households that owned these assets, the median value of business interests, other non-financial assets, and stocks and bonds grew over the entire age categories, as illustrated by Table 3 below.
For renters, more than half of renters owned other financial assets, but they did not accumulate as they aged. Noticeably, fewer than half of renters owned retirement accounts, other residential real estate, other non-financial assets, and business interests at any age cohort. When renters were 65 or older, the median value of their financial assets and non-financial assets dropped by almost half from the median value when they were under 35.
DEBT:
On the debt side of homeowners’ balance sheets, the value of the primary home mortgage debt was the largest liability faced by homeowners. However, the median value of mortgage debt declined between the 35 to 64 age categories. More than half of homeowners above the age of 65 did not have mortgage debt (nor a balance on any of the other major debt categories).
For renters, the value of credit card and installment debt was the largest liability in their debt category. The median value of credit card and installment debt declined between the 35 to 64 age categories and was zero for renters aged 65 or older.
NET WORTH:
Net worth, the measure of households’ wealth, is the difference between families’ assets and liabilities. An analysis of the 2022 SCF found that homeowners had a median net worth of $396,000, while renters had the median net worth of just $10,400. Thus, homeowners are wealthier than renters.
Among homeowners, the primary residence equity was the largest category of their net worth. However, for renters, the non-primary residence equity was the larger portion of their net worth, reflecting the accumulation of other assets by renters in their life stages, as illustrated in Table 2.
Across homeowners, the median amount of primary residence equity rose successively with age, largely reflecting a lower amount of mortgage debt as opposed to a higher home value.
In 2022, the median net worth for homeowners was about 38 times the median net worth for renters. Excluding the primary residence equity from net worth, the median non-residence equity of homeowners was 15 times that of renters.
Note:
1 Ford, C. (2019). “Lifetime Homeownership and Homeownership Survival Rates Using the National Longitudinal Survey of Youth,” NAHB Special Studies, November 1, 2019.
2 Other residential real estate includes land contracts/notes household has made, properties other than the principal residence that are coded as 1-4 family residences, time shares, and vacation homes.
3 Other non-financial assets defined as total value of miscellaneous assets minus other financial assets.
4 Other financial assets include loans from the household to someone else, future proceeds, royalties, futures, non-public stock, deferred compensation, oil/gas/mineral investments, and cash, not elsewhere classified.
5 According to the SCF, the term “families”, used in the SCF, is more comparable with the U.S. Census Bureau definition of “households” than with its use of “families”. More information can be found here: https://www.federalreserve.gov/publications/files/scf17.pdf.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In October, Jesse Wade shared the average real estate tax by state and also an effective rate controlling for home value.
Nationally, across the 86 million owner-occupied homes in the U.S., the average annual real estate taxes paid in 2023 was $4,112, according to NAHB analysis of the 2023 American Community Survey. Homeowners in New Jersey continued to pay the highest real estate taxes, paying an average of $9,572, 30.6% higher than the second highest, New York, at $7,329 . On the other end of the distribution, homeowners in Alabama paid the lowest average amount of real estate taxes at $978. The map below shows the geographic variation of average annual real estate taxes (RETs) paid.
Compared to 2022, every state saw increases in the average amount of real estate taxes paid. The largest percentage increase was in Hawaii, up 21.1% from $2,541 to $3,078. The smallest increase was in New Hampshire, up 1.1% from $6,385 to $6,453.
Average Effective Property Tax Rates
While average annual real estate taxes paid is important, it provides an incomplete picture. Property values vary across states, which explains some, if not most, of the variation across the nation in average annual real estate taxes. To control for property values and create a more informative state-by-state analysis, NAHB calculates the average effective property tax rate by dividing aggregate real estate taxes paid by aggregate value of owner-occupied housing within each state. For example, the aggregate real estate taxes paid across the U.S. was $352.3 billion with an aggregate value of owner-occupied real estate totaling $38.8 trillion in 2023. Using these two amounts, the average effective property tax rate nationally was $9.09 ($352.3 billion/$38.8 trillion) per $1,000 in home value. This effective rate can be expressed as a percentage of home value or as a dollar amount taxed per $1,000 of a home’s value. The map below displays the effective rate by state below.
Illinois, a change from New Jersey in 2022 , had the highest effective property tax rate at $18.25 per $1,000 of home value. Consistent with 2022, Hawaii had the lowest effective property tax rate at $3.18 per $1,000 of home value. Additionally, Hawaii had the largest increase over the year, up 18.8% from $2.68 in 2022. Twenty states saw their effective property tax rates fall between 2022 and 2023, with the largest decrease occurring in West Virginia where it fell 6.0%, from $5.06 to $4.75 per $1,000.
Intrastate Variation: Examples from New York
While property taxes clearly vary by state, there also exists variation within states themselves. The latest county level data available comes from 2022 5-year ACS estimates. Analyzing these data , New York showed the highest degree of variation of average property taxes paid and effective real estate tax rates across the counties of any state. Home owners in Westchester County on average paid $14,156 in real estate taxes in 2022, the highest of any county in New York. The lowest amount was in Hamilton County, where home owners paid on average $2,827 in real estate taxes.
For effective property tax rates, New York continues to tell the story of intrastate variation. As shown above, Westchester County paid the higher average annual real estate taxes in 2022, but looking at effective property tax rate, which accounts for home value, Westchester’s effective property tax rate is near the middle at $18.34. Home owners in Monroe County seem to get the short end of the stick, paying at a rate of $26.27 per $1,000 of home value, the highest in New York. The lowest effective property tax rate was in Kings County, paying a mere $5.30 per $1,000 of home value in taxes.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In June, Chief Economist Rob Dietz highlighted the importance of both new and existing home inventory in understanding housing market dynamics, emphasizing that while rising inventory may signal price moderation, the current low levels of resale homes still support home construction and price growth.
Total (new and existing) home inventory is an important measure for gauging and forecasting home prices and home construction impacts. The intuition is clear: more inventory yields weaker or declining home price growth and home building activity. Lean inventory levels lead to price growth and gains for home building.
The metric “months’ supply” is a common measure of current market inventory. For both new and existing home markets, months’ supply converts inventory from a count of homes into a measure of how many months it would take for that count of home inventory to be sold at the current monthly sales pace.
Housing economists typically advise that a balanced market is a five- to six-months’ supply. Larger inventory levels than this benchmark risk producing deteriorating conditions for price growth and building activity.
In the Census May 2024 newly-built home sales data, the current months’ supply of inventory is 9.3. Some analysts have noted that, given the five- to six-month benchmark, that this means the building market for single-family homes is possibly oversupplied, implying declines for construction and prices lie ahead.
However, this narrow reading of the industry misses the mark. First, it is worth noting that new home inventory consists of homes completed and ready to occupy, homes currently under construction and homes that have not begun construction. That is, new home inventory is a measure of homes available for sale, rather than homes ready to occupy. In fact, just 21% of new home inventory in May consisted of standing inventory or homes that have completed construction (99,000 homes).
More fundamentally, an otherwise elevated level of new home months’ supply is justified in current conditions because the inventory of resale homes continues to be low. Indeed, according to NAR data, the current months’ supply of single-family homes is just 3.6, well below the five- to six-month threshold. It is this lack of inventory that has produced ongoing price increases despite significantly higher interest rates over the last two years.
Taken together, new and existing single-family home inventory, the current months’ supply of both markets is just 4.4, as estimated for this analysis. This is admittedly higher than the 3.6 reading, using this approach, from a year ago, but it still qualifies as low. See the following graph for total months’ supply going back to the early 1980s using data from the NAR existing home sales series and the Census new home sales data, as calculated by NAHB.
Yes, inventory is rising and will continue to rise, particularly as the mortgage rate lock-in effect diminishes in the quarters ahead. But current inventory levels continue to support, on a national basis, new construction and some price growth, per this current reading of total months’ supply.
Further, the housing deficit (NAHB estimates about 1.5 million homes), which was produced by a decade of underbuilding due to a perfect storm of supply-side challenges, has generated a separation in the normally co-linear measures of new and existing home months’ supply. This separation became particularly pronounced during the COVID and post-COVID period of the housing market. June 2022 recorded the largest ever lead of new home months’ supply (9.9) over existing single-family home months’ supply (2.9). This separation makes it clear that an evaluation of current market inventory cannot simply examine either the existing or the new home inventory in isolation.
With the current total months’ supply at 4.4, what does this mean for the market, particularly with respect to pricing and construction trends? To examine this question, I calculated the total months’ supply reported on the first graph in this post. I then examined price movements and single-family construction starts data with respect to current total months’ supply. The results are broadly consistent with the existing rules of thumb regarding market conditions.
The horizontal axis plots total months’ supply for monthly data going back to the start of 1988 (the starting point of the price data used for this analysis). The vertical axis records the corresponding year-over-year home price growth for the same month as measured by the Case-Shiller Home Price Index. The trend line is estimated using a simple linear regression. The statistical correlation indicates that home price growth, on average, turns negative when inventory reaches an 8-months’ total supply (on the graph, the trend line intersects the horizontal axis, measuring zero percent price growth, at 8 months’ supply).
To be clear, this does not mean that prices will not fall until months’ supply exceeds eight. For example, 24% of the data registering 6.5 to 7.5 months’ supply recorded home price declines. For the data in the range of 7.5 months’ supply to less than 8 months’ supply, this share increased to 36%. Overall, for months with less than an eight months’ supply, it was less likely than not to see home price declines, but it did happen in certain market conditions.
And to be complete, home prices did not always fall when total inventory was greater than an eight months’ supply. For example, for months with a months’ supply measure of 8.5 to 9.5, homes prices increased 36% of the time.
Taken together, these general trends indicate that a months’ supply of less than eight has historically been positive for nominal home price growth. That’s where market conditions are today.
What about impacts for single-family home building? The data are little less clear (as seen by smaller R-squared measures on the trends), but this should not be a surprise. Home building is a function of both demand-side housing factors, like mortgage interest rates, as well as volatile supply-side variables like the cost and availability of labor, lots, lending, lumber/materials, and legal/regulatory policies and fees. Nonetheless, using Census housing starts data and the same total months’ supply metric, a trend is apparent, and it is one that matches up well with existing rules of thumb.
As the chart above indicates, a simple linear trend of monthly data going back to mid-1982 (the limit of the supply data) indicates that at roughly 6-months’ total home inventory, single-family home building reaches a zero percent year-over year growth rate. As before, and as seen in the graph above, the correlation is not absolute.
For example, for otherwise tight 4.5 months’ to 5.5 months’ new and existing home supply, single-family home building did contract 27% of the time. On the other hand, for markets with more inventory than the benchmark (6.5 to 7.5 months’ supply), home building expanded 30% of the measured months. As with home prices, the trend is not absolute, but the six-months’ supply benchmark is a useful rule of thumb for examining whether builders will reach a neutral stance for expanding home construction activity.
It is worth noting that home builder production can occur with a lag with respect to inventory conditions. For example, the time between permit approval and the start of construction was approximately 1.3 months in 2022 (2023 data will be available in the coming months). And single-family construction time averaged 8.3 months, per NAHB estimates using Census data. Mindful of these lags, I examined the impact of total months’ supply on single-family starts with both a three-month and six-month lag. In both analyses, the 6-months’ benchmark was again validated. For a relatively straightforward analytical approach, this represents a fairly robust result, albeit one with a notable amount of statistical noise due to supply-side factors associated with construction inputs and constraints.
The data thus show that current market conditions are unusual, with a large gap between new and existing single-family months’ supply. Analyses that rely on just one of these measures will be misleading. A total months’ supply measure that measures both new and existing inventory is required to gauge the status of inventory conditions and possible impacts on home prices and home building.
Furthermore, the historical correlations suggest that home builders will significantly slow home building activity at a 6-months’ supply of total housing inventory. And price declines become more likely than not at an 8-months’ supply.
In the meantime, builders, housing stakeholders, and analysts should view the current nine months’ supply for new homes within its proper context. This will be particularly important as resale levels continue to rise, with additional gains expected to occur as the mortgage-rate lock-in effect diminishes in the quarters ahead. However, keep in mind, lower mortgage rates will also unambiguously improve housing affordability conditions and price prospective home buyers back in the market, thus putting downward pressure on the months’ supply metric by increasing sales rates.
With each Census new home sales report, NAHB will continue to estimate and watch the total months’ supply measure. But given this analysis, at 4.4 total months’ supply, inventory levels have increased but remain low and supportive of limited gains for home building and upward pressure on nominal home prices.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In February, Na Zhao shared the latest data on ages of homeowners as well as when their homes were built.
The median age of owner-occupied homes is 40 years old, according to the latest data from the 2022 American Community Survey[1]. The U.S. owner-occupied housing stock is aging rapidly especially after the Great Recession, as the residential construction continues to fall behind in the number of new homes built. New home construction faces headwinds such as rising material costs, labor shortage, and elevated interest rates nowadays.
With a lack of sufficient supply of new construction, the aging housing stock signals a growing remodeling market, as old structures need to add new amenities or repair/replace old components. Rising home prices also encourage homeowners to spend more on home improvement. Over the long run, the aging of the housing stock implies that remodeling may grow faster than new construction.
New construction added nearly 1.7 million units to the national stock from 2020 to 2022, accounting for only 2% of owner-occupied housing stock in 2022. Relatively newer owner-occupied homes built between 2010 and 2019 took up around 9%. Owner-occupied homes constructed between 2000 and 2009 make up 15% of the housing stock. The majority, or around 60%, of the owner-occupied homes were built before 1980, with around 35% built before 1970.
Due to modest supply of housing construction, the share of new construction built within the past 12 years declined greatly, from 17% in 2012 to only 11% in 2022. Meanwhile, the share of housing stock that is at least 53 years old experienced a significant increase over the 10 years ago. The share in 2022 was 35% compared to 29% in 2012.
[1] : Census Bureau did not release the standard 2020 1-year American Community Survey (ACS) due to the data collection disruptions experienced during the COVID-19 pandemic. The data quality issues for some topics remain in the experimental estimates of the 2020 data. To be cautious, the 2020 experimental data is not included in the analysis.
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With the end of 2024 approaching, NAHB’s Eye on Housing is reviewing the posts that attracted the most readers over the last year. In April, Natalia Siniavskaia shared wages by occupation in construction including the median salaries and top 25% salaries.
Half of payroll workers in construction earn more than $58,500 and the top 25% make at least $79,450, according to the latest May 2023 Bureau of Labor Statistics Occupational Employment and Wage Statistics (OEWS) and analysis by the National Association of Home Builders (NAHB). In comparison, the U.S. median wage is $48,060, while the top quartile (top 25%) makes at least $76,980.
The OES publishes wages for almost 400 occupations in construction. Out of these, only 46 are construction trades. The other industry workers are in finance, sales, administration and other off-site activities.
The highest paid occupation in construction is Chief Executive Officer (CEO) with half of CEOs making over $172,000 per year. Lawyers working in construction are next on the list with the median wages of $166,450, and the top 25 percent highest paid lawyers making over $221,220. Out of the next ten highest paid trades in construction, eight are various managers. The highest paid managers in construction are architectural and engineering managers, with half of them making over $145,180 and the top 25 percent on the pay scale earning over $176,270 annually.
Among construction trades, elevator installers and repairers top the median wages list with half of them earning over $103,340 a year, and the top 25% making at least $129,090. First-line supervisors of construction trades are next on the list; their median wages are $76,960, with the top 25% highest paid supervisors earning more than $97,500.
In general, construction trades that require more years of formal education, specialized training or licensing tend to offer higher annual wages. Median wages of construction and building inspectors are $65,790 and the wages in the top quartile of the pay scale exceed $88,800. Half of plumbers in construction earn over $61,380, with the top quartile making over $80,300. Electricians’ wages are similarly high.
Carpenters are one of the most prevalent construction crafts in the industry. The trade requires less formal education. Nevertheless, the median wages of carpenters working in construction exceed the national median. Half of these craftsmen earn over $57,300 and the highest paid 25% bring in at least $73,800.
The OEWS program adopted a new estimation methodology in 2021. As a result, the previously published estimates are not directly comparable to the post-pandemic editions. Nevertheless, comparing the median wages in construction over the last two years reveals that, on average, lower-paid occupations experienced a somewhat faster wage growth. Median wages of drywall installers, for example, grew 11%. Moreover, the overall construction median increased 7.3%, one of the largest increases among all industries.
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2. Compact on the Cape
Architect Chris Brown of b Architecture Studio and interior designer Michael Ferzoco of Eleven Interiors worked together to fit functionality and style into every inch of this under-800-square-foot shingled Cape Cod cottage, which is the vacation home of a Connecticut couple and their two sons. The family can enjoy beautiful harbor views through these windows, which stretch across the front facade and wrap around the sides. Inside are well-defined living, dining, cooking and entry zones with 12-foot ceilings, plus two bedrooms, two bathrooms and a small loft. When designing the interior’s contemporary coastal aesthetic, Ferzoco took color cues from the sunset and focused on built-ins to maximize space. Outside, a dining table and lounge area can accommodate bigger groups, helping the small cottage “live large.”
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This article was originally published by a www.houzz.com . Read the Original article here. .
With advances in technology and efficiency, new appliances are an important upgrade for many renovating homeowners.
Among large kitchen appliances, renovating homeowners go for dishwashers (71%) and microwaves (70%) most frequently, followed by ranges (64%), refrigerator-freezer combinations (62%) and range hoods (61%). Homeowners also frequently upgrade cooktops (39%) and wall ovens (31%), while smaller shares opt for beverage refrigerators (18%) and wine refrigerators (14%).
For the most part, homeowners prioritize quality and aesthetics over cost. Quality is the top priority, influencing 64% of homeowners, while look and feel is most important for 50%. Though cost is a lower priority for most, 29% of renovating homeowners still cite it as the reason for their appliance purchase. Substantial shares also prioritize size (27%), specialty features (25%) and energy efficiency (22%).
Meanwhile, stainless steel is by far the leading choice for appliances, chosen by 74% of homeowners. White (7%), black stainless steel (5%) and black (3%) trail far behind.