The Nail, August 2022

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NAIL The official magazine of Home Builders Association of Middle Tennessee President Nick Wisniewski Vice President Brandon Rickman Secretary/Treasurer Jim Hysen Executive Vice President John Sheley Editor and Designer Jim Argo Staff Connie Nicley Hannah Garrard

THE NAIL is published monthly by the Home Builders Association of Middle Tennessee, a non-profit trade association dedicated to promoting the American dream of homeownership to all residents of Middle Tennessee.

SUBMISSIONS: THE NAIL welcomes manuscripts and photos related to the Middle Tennessee housing industry for publication. Editor reserves the right to edit due to content and space limitations.

POSTMASTER: Please send address changes to: HBAMT, 9007 Overlook Boulevard, Brentwood, TN 37027.

Phone: (615) 377-1055.

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FEATURES 8 2022 Golf Tournament Sponsorships now available

The James Hardie Golf Tournament is for Thursday, August 18th in Spring Hill! Secure your sponsorship today!

9 Economic Update from NAHB Chief Economist

NAHB Chief Economist Robert Dietz provides an economic update with a focus on the Federal Reserve’s raising of federal funds.

12 Membership Trip this September

The HBAMT has a Membership Trip to Costa Mujeres, Mexico scheduled for September.

Register now to take part in all the fun!

13 2022 Parade advertising and exhibiting opportunities

Advertise in

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NAIL For advertising rates and information, or to secure your ad, please email jargo@hbamt.org with your questions and requests.

The Pinnacle Financial Partners Parade of Homes returns this fall to Rosebrooke. Secure your planbook space today!

DEPARTMENTS 6 News & Information 15 SPIKE Club Report 16 August Calendar 16 Chapters and Councils

ON THE COVER: NAHB Chief Economist provides an economic update. See page nine for more details.

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NEWS&INFO

New home sales down in June amid affordability concerns

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ew home sales in June fell to the lowest level since April 2020, reflecting declining builder sentiment as construction bottlenecks continue to slow new home building and raise housing costs.

Sales of newly built, single-family homes in June fell 8.1% to a 590,000 seasonally adjusted annual rate from a sharply downwardly revised reading in May, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. New home sales are down 13.4% in 2022 on a year-to-date basis.

“Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs, including building materials,” said Jerry Konter, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Savannah, Ga. “This is just the second time that new home sales have fallen below a 600,000 annual pace since Oct. 2018, and this latest report also mirrors a sharp decline

Builders saw sales decline significantly as buyers were priced out of the market on higher interest rates and ongoing home building and development costs.

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in builder confidence as noted in our latest survey.”

“Buyers are balking due to deteriorating affordability conditions and growing sticker shock,” said Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis. “Only 14% of new home sales in June were priced below $300,000. A year ago, it was 27%. Meanwhile, inventory levels are elevated and will contribute to near-term production declines as the market finds a new balance.”

A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed.

In addition to adjusting for seasonal effects, the June reading of 590,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory remained elevated at a 9.3 months’ supply, up 60.3% over last year, with 457,000 available for sale. However, only 39,000 of the new home inventory is completed and ready to occupy. The remaining have not started construction or are currently under construction.

The median sales price dipped to $402,400 in June, down 9.5% compared to May, but is up 7.4% compared to a year ago.

Regionally, on a year-to-date basis, new home sales fell in all four regions, down 12.1% in the Northeast, 24.8% in the Midwest, 12.6% in the South and 9.6% in the West. n

Remodeling market confidence declines

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he NAHB released its NAHB/Westlake Royal Remodeling Market Index (RMI) for the second quarter, posting a reading of 77, declining 10 points compared to the second quarter of 2021.

“Although most remodelers across the country are still positive about the market, a growing number are starting to experience symptoms of a slowdown,” said NAHB Remodelers Chair Kurt Clason, a remodeler from Ossipee, N.H. “Some customers are showing a reluctance to go for-

ward with projects due to the higher costs and delays associated with material shortages, as well as higher interest rates.”

The Current Conditions Index averaged 83, dropping eight points compared to the second quarter of 2021. Additionally, the component measuring large remodeling projects ($50,000 or more) fell 11 points to 79, the component measuring moderately-sized remodeling projects (at least $20,000 but less than $50,000) dropped seven points to 84 and the component measur-

Single-family starts fall, builder confidence down in July

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ncreased interest rates, building material supply chain bottlenecks and elevated construction costs continue to put a damper on the single-family housing market. For the first time since June 2020, both single-family starts and permits fell below a 1 million annual pace.

Overall housing starts fell 2.0% to a seasonally adjusted annual rate of 1.56 million units in June from an upwardly revised reading the previous month, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The June reading of 1.56 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 8.1% to a 982,000 seasonally adjusted annual rate. This is the lowest single-family starts pace since June 2020. The multifamily sector, which includes apartment buildings and condos, increased 10.3% an annualized 577,000 pace.

“Single-family starts are retreating on higher construction costs and interest rates, and this decline is reflected in our latest builder surveys, which show a steep drop in builder sentiment for the single-family market,” said Jerry Konter, NAHB chairman. “Builders are reporting weakening traffic as housing affordability declines.”

“While the multifamily market remains strong on solid rental housing demand, the softening of single-family construction data should send a strong signal to the Federal Reserve that tighter financial conditions are

producing a housing downturn,” said NAHB Chief Economist Robert Dietz. “Price growth will slow significantly this year, but a housing deficit relative to demographic need will persist through this ongoing cyclical downturn.”

On a regional and year-to-date basis, combined single-family and multifamily starts are 4.4% lower in the Northeast, 4.7% higher in the Midwest, 11.1% higher in the South and 0.4% lower in the West.

Overall permits decreased 0.6% to a 1.69 million unit annualized rate in June. Single-family permits decreased 8.0% to a 967,000 unit rate.

This is the lowest pace for single-family permits since June 2020. Multifamily permits increased 11.5% to an annualized 718,000 pace.

Looking at regional permit data on a year-todate basis, permits are 5.1% lower in the Northeast, 2.5% higher in the Midwest, 2.9% higher in the South and 3.0% higher in the West.

Builder confidence drops in July Builder confidence plunged in July as high inflation and increased interest rates stalled the housing market by dramatically slowing sales and buyer traffic. In a further sign of a weakening housing market, builder confidence in the market for newly built single-family homes posted its seventh straight monthly decline in July, falling 12 points to 55, according to the most recent NAHB/Wells Fargo Housing Market Index (HMI). This marks the lowest HMI reading since May 2020 and the largest single-month drop in the history of the HMI, ex-

ing small remodeling projects (under $20,000) declined by six points to 86.

The Future Indicators Index dropped 11 points to 72 compared to the second quarter of 2021. The component measuring the current rate at which leads and inquiries are coming in fell 13 points to 68 and the component measuring the backlog of remodeling jobs decreased by 10 points to 76.

“The RMI remains firmly in positive territory above 50 but has declined on a year-over-year basis,” said NAHB Chief Economist Robert Dietz. “This suggests some weakness in the market and is consistent with NAHB’s projection that residential remodeling spending, like new residential construction, will be down in 2022. n

cept for the 42-point drop in April 2020.

“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” said Konter, a home builder and developer from Savannah, Ga. “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”

“Affordability is the greatest challenge facing the housing market,” said Dietz. “Significant segments of the home buying population are priced out of the market. Policymakers must address supply-side issues to help builders produce more affordable housing.”

Derived from a monthly survey that NAHB has been conducting for more than 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”

The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted declines in July: Current sales conditions dropped 12 points to 64, sales expectations in the next six months declined 11 points to 50 and traffic of prospective buyers fell 11 points to 37.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell six points to 65, the Midwest dropped four points to 52, the South fell eight points to 70 and the West posted a 12-point decline to 62. n August, 2022

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2022 Golf Tournament Sponsorships!

The 11th Annual HBAMT Golf Tournament is set for Thursday, August 18 at the Towhee Club in Spring Hill. Sign up now to sponsor at one of the following levels! selection

sponsorship level

price/# available benefits

TITLE SPONSOR

$10,000 1 available

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Company name featured as headliner on all materials Booth at registration, awards wrap-up & course hole Opportunity to hand out promotional materials Signage provided

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Lunch Sponsor

$5,000 1 available

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Company name featured as Lunch Sponsor on all material Booth at check-in and Golf Tournament course hole Opportunity to hand out promotional materials Four (4) tickets to Wrap-up

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Breakfast Sponsor

$3,000 1 available

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Company name featured as Breakfast Sponsor on all material Booth at check-in and Golf Tournament course hole Your booth will be breakfast ticket pick up point for all golfers Opportunity to hand out promotional materials Two (2) tickets to Wrap-up

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Platinum

$1,200

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Company name featured on all materials Booth at wrap-up & course hole Opportunity to hand out promotional materials at hole Signage at tournament provided Two (2) tickets to wrap-up

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Single hole sponsor for both morning & afternoon rounds Opportunity to hand out promotional materials at hole Signage at tournament provided Opportunity to hand out information & goodies Two (2) tickets to wrap-up

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Gold Sponsor

SOLD SOLD SOLD

$1,500 SOLD OUT

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Silver Sponsor

$600

l Hole sponsor for both morning & afternoon rounds l Opportunity to hand out promotional materials at hole l Two (2) tickets to wrap-up

Hospitality Cart

$2,000 SOLD OUT

l Hospitality cart with your name on it l Opportunity to ride cart in morning & afternoon rounds moving freely within the course handing out beverages & goodies

Wrap-up Party Sponsor

$3,000 1 available

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SOLD OUT

SOLD OUT

Company name featured as Wrap-up Sponsor on all material Booth at check-in and Golf Tournament course hole Opportunity to hand out promotional materials Two (2) tickets to Breakfast

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Indicate which of the THREE (3) sponsorship levels still available above you selected and return the completed form below to the HBAMT to sign up today! (List company EXACTLY as you want it to appear on signage.)

CONTACT _________________________________ COMPANY ___________________________________ EMAIL ____________________________________ PHONE ______________________________________ Your Name (print) ____________________________ Signature ____________________________________ Return to: HBAMT - 9007 Overlook Blvd, Brentwood, TN 37027 l Email: cnicley@hbamt.org

HBAMT does not allow subletting of any of services, products, promotional opportunities or memberships. **A 3% convenience fee is applied to all credit card transactions.** 8 The NAIL

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Federal Reserve raises by 75 basis points Economic Update from Robert Dietz, NAHB Chief Economist

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ontinuing its tightening of financial conditions to bring the rate of inflation lower, the Federal Reserve’s monetary policy committee raised the federal funds target rate by 75 basis points, increasing that target to an upper bound of 2.5%. This move matches the June rate hike as the largest increase for the funds rate since 1994.

While committing to a policy path that will slow demand and reduce inflation pressure, the Fed also, in the first sentence of its July policy statement, acknowledged signs of slowing economic activity (“Recent indicators of spending and production have softened.”).

Among the clear signs of this slowing are just about every housing indicator, including seven straight months of declines for home builder sentiment. Indeed, an open macro question is whether the economy experienced a recession during the first half of 2022.

GDP data for the second quarter published tomorrow will provide additional evidence (although a rising unemployment rate remains missing for the NBER call). However, given declines for single-family permits, single-family starts, pending home sales, and rising sales cancellations rates, it is clear a housing industry recession is ongoing.

Market participants have reduced their expectations for future Fed rate hikes, which is perhaps a sign of renewed confidence in the ability of the Fed to bring inflation down (even if it means a recession in the so-called hard landing scenario). Higher interest rates and lower economic growth will eventually bring inflation rates down. The path of required additional tightening will depend on economic growth and inflation data, moving the Fed to a more data dependent stance. Thus, the chance of the Fed decelerating to a 50 basis point hike in September is increasing.

It is important to note that there is not a direct connection between federal fund rate

hikes and changes in long-term interest rates.

During the last tightening cycle, the federal funds target rate increased from November 2015 (with a top rate of just 0.25%) to November 2018 (2.5%), a 225 basis point expansion.

However, during this time mortgage interest rates increased by a proportionately smaller amount, rising from approximately 3.9% to just under 4.9%.

Moreover, the spread between the 30-year fixed rate mortgage and the 10-year Treasury rate has expanded to more than 270 basis points as of this week. Before 2020, this spread averaged a little more than 170 basis points.

This elevated spread is a function of MBS bond sales as well as uncertainty related to housing market uncertainty. While the 10-year rate has flattened in recent weeks on growth concerns, a reduction in this spread would be

a positive sign for mortgage rates and housing demand.

Finally, the Fed has previously noted that inflation is elevated due to “supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.” While this verbiage may incorporate policy failures that have affected aggregate supply and demand, the Fed should explicitly acknowledge the role fiscal, trade and regulatory policy is having on the economy and inflation as well. n

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Call Connie Nicley at 615-347-0173 to reserve your Suite today.

(We’re Going to have FUN!) Email to: cnicley@hbamt.org 12 The NAIL

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Pinnacle Financial Partners Parade of Homes The 2022 Parade of Homes at Rosebrooke

ADVERTISE & EXHIBIT

If your company depends on new homes or

related products, furnishings or services, here’s one opportunity you can’t pass up -- the 2022 Pinnacle Financial Partners Parade of Homes at Rosebrooke! Secure your space in the Plan Book or reserve an Exhibit Booth today.

THE PARADE PLAN BOOK

THE PARADE EXHIBIT BOOTH

At every Parade event each attendee is handed a magazine as they walk through the front gate - the Parade Plan Book.

Here’s your chance to demonstrate your product or service to the thousands of qualified prospects who pass through the Parade of Homes exhibit center when they enter and leave the show. As with Plan Book advertising, the exhib­it center produces virtually all pre-qualified customers!

The Plan Book is a tremen­dous opportunity to put your message into the hands of pre-qualified customers who refer to the book several months after the Parade of Homes is over!

Plan Book Advertising Rates Half Page 7.5” x4.75” (Horizontal) Full Page 7.5”x10” 8.75”x 11.25” (B1eed) *Page One 7.5”x10” 8.75”x11.25” (Bleed) *Inside Front Cover *Inside Back Cover Double Truck *Back Cover

$800 $1,200 $1,600 $2,100 $2,300 $2,840 $3,250

*SPECIALTY LOCATIONS SOLD. Email jargo@hbamt.org for ad specs and availability.

It’s like opening up shop and having thousands of prospects visit your show­room the first two weeks you’re in business. What other medium could come close to producing those kinds of results? The Parade ranks first of all home shows in the nation and you can take advantage of the prestige this show enjoys.

Exhibit Booth Price? $750 Each booth in the Parade of Homes exhibit center measures 10’ x 6’ at the front entrance where patrons must enter and exit -- perfect for eye-pop­ping kiosks and marketing publications!

2022 PARADE OF HOMES - PROMOTIONAL OPPORTUNITIES COMMITMENT FORM Return completed form to: HBAMT, 9007 Overlook Blvd., Brentwood, TN 37027 | Email: jargo@hbamt.org

PLAN BOOK AD - please check the size of ad you would like to secure in the 2022 Plan Book:

r Half Page

r Full Page

r 2-Page Spread

EXHIBIT BOOTH SPACE - please check here to secure your 2022 Exhibit Booth Space: r Your name: ____________________________________ Company: _____________________________________ Cell: _________________________________________ Email: _________________________________________ Total amount being paid: $___________ Credit Card _______________________ Credit Card # _______________________________ Exp. ____________ Credit Card V-Code _______________

The “v-code” is found on the back of the card, usually printed or embossed atop or near the signature strip.

It is comprised of three digits found to the right of a longer number.

Signature ____________________________________________________________________________________ August, 2022

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SPIKE REPORT Steve Shalibo 176 Brandon Rickman 170 Jim McLean 165 Tonya Esquibel 155 Steve Cates 147 Harry Johnson 146 Life Spikes Twenty-seven SPIKES (in bold) increased their recruitment numbers last month. What is a SPIKE? SPIKES recruit new members and help the association retain members. Here is the latest SPIKE report as of June 30, 2022.

Top 20 Big Spikes Mitzi Spann 793 Terry Cobb 570 Trey Lewis 542 James Carbine 447 Jimmy Franks 416 Jennifer Earnest 384 David Crane 349 Kevin Hale 302 Reese Smith III 261 Davis Lamb 225 Sonny Shackelford 219 Nick Wisniewski 190 David Hughes 184 Randall Smith 181

C.W. Bartlett 138 Jordan Clark 132 Michael Dillon 123 B.J. Hanson 122 Dave McGowan 121 John Zelenak 118 Justin Hicks 116 Edsel Charles 113 Wiggs Thompson 108 Duane Vanhook 108 Keith Porterfield 84 Jody Derrick 81 Sam Henley 81 Erin Richardson 77 Ron Schroeder 75 Beth Sturm 75 Joe Dalton 72 Nelson Bordeau 71 Christina James 68 Andrew Neuman 67 Rachel Holloway 56 Brian Sebring 56

John Broderick 55 Ryan Meade 54 Rick Olszewski 54 John Ganschow 51 Frank Jones 50 Jim Hysen 47 Ricky Scott 45 Don Mahone 31 Lisa Underwood 31 Jeffrey Caruth 28 Margaret Tolbert 26 Kelvey Benward 25 Maverick Green 25 Spikes Perry Pratt 24 Tammy Chambers 21 Danny Clawson 17 Nicole Bird 15 Rob Pease 15 Eli Routh 15 John Nehrenz 14 Chris Richey 11 Curt Haynes 11 George Simpson 10 Clint Mitchell 9 Bob Bellenfant 8 Matt Dryden 7 Randy Arnold 6 McClain Franks 6

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AUGUST CALENDAR Sunday

Monday

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Wednesday

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Thursday

Friday

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Saturday

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Sales & Marketing Council meeting

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11 Wilson County Chapter meeting/event

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18 James Hardie Golf Tournament

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CHAPTERS & COUNCILS CHAPTERS

Robertson County RSVP line: 615-377-9651, ext. 313.

COUNCILS

CHEATHAM COUNTY CHAPTER Chapter President - Roy Miles: 615/646-3303 Cheatham County Chapter details are being planned.

Next meeting: to be announced.

Chapter RSVP Line: 615/377-9651, ext. 310

SUMNER COUNTY CHAPTER Chapter President - Joe Dalton: 615/972-7149 The Sumner County Chapter meets on the fourth Tuesday of the month, 11:30 a.m. at the new Hendersonville Library.

Next meeting: to be announced.

Chapter RSVP Line: 615/377-9651, ext. 262

HBAMT REMODELERS COUNCIL Council President - Eli Routh.

The HBAMT Remodelers Council meets on the third Thursday of the month at varying locations.

Next meeting: to be announced. 11 a.m. to 12:30 p.m. at a location to be determined.

Topic: to be announced.

Price: free with RSVP. Council RSVP Line: 615/377-9651, ext. 263

DICKSON COUNTY CHAPTER Chapter President - Mark Denney: 615/446-2873.

The Dickson County Chapter meets on the third Monday of the month, 12:00 p.m. at Colton’s Steakhouse in Dickson.

Next meeting: to be announced.

Price: FREE, lunch dutch treat.

Chapter RSVP Line: 615/377-9651, ext. 264 MAURY COUNTY CHAPTER Chapter President - Kelly Beasley.

Maury County Chapter details are currently being planned.

Next meeting: to be announced.

Chapter RSVP line: 615-377-9651, ext. 312; for callers outside the 615 area code, 1-800-571-9995, ext. 312 METRO/NASHVILLE CHAPTER Chapter President - Tonya Esquibel The Metro/Nashville Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices.

Next meeting: to be announced.

Topic: to be announced.

Price: to be announced.

RSVP to: cnicley@hbamt.org.

ROBERTSON COUNTY CHAPTER Next meeting: to be announced.

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WILLIAMSON COUNTY CHAPTER Chapter President - John Nehrenz The Williamson County Chapter meets on the third Tuesday of the month, 11:30 a.m. at the HBAMT offices.

Next meeting: to be announced.

Builders Free pending sponsorship.

Price: $10 per person with RSVP ($20 w/o RSVP).

Chapter RSVP Line: 615/377-9651, ext. 305 WILSON COUNTY CHAPTER Chapter President - Margaret Tolbert The Wilson County Chapter meets on the second Thursday of the month, 9:00 a.m. at the Mt. Juliet Chamber of Commerce: 2055 N. Mt. Juliet Road, #200 - 37122.

Next meeting: Thursday, August 11th.

Topic: “MYTH BUSTERS: AHHH! We are in a housing bubble!” With a panel of housing experts including Trey Lewis from Ole South Properties, Michael Runion with Movement Mortgage, and David Lipford with Team Wilson Real Estate Partners.

HBAMT members Free w/RSVP thanks to Movement Mortgage and Mortgage Mike.

RSVP to: cnicley@hbamt.org.

INFILL BUILDERS COUNCIL The Infill Builders Council typically meets on the third Thursday of the month, 11:30 a.m. at the HBAMT offices Next meeting: to be announced.

Price: to be announced.

RSVP to: 615/377-9651, ext. 265.

MIDDLE TENN SALES & MARKETING COUNCIL Council President - Lisa Underwood.

The SMC typically meets on the first Thursday of the month, 9:00 a.m. at the HBAMT offices.

Next meeting and topic: Thursday, August 4th, 9:00 a.m. at the HBAMT. Topic: “2022 Global Color and Design Forecast,” with Ruthanne M. Hanlon, National Color+Design Manager, PPG Paints.

SMC members free thanks to PPG Paints; non-SMC members $20 w/RSVP, $25 w/o RSVP RSVP to: cnicley@hbamt.org.

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