SC Builder Journal Issue 3

South Carolina

Builder Journal ISSUE 3 - 2024

2024 Pr iced Ou t Est im at es

2024 Legislat ive Updat e

Pin n acle Aw ar d Call f or En t r ies Residen t ial Con st r u ct ion St ar t s 1

w w w.h baof sc.com

TABLE OF CONTENTS

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President 's Message

p. 7

Per m it In f or m at ion

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Legislat ive Session Review

p. 16

Ham m er & Tr ow el Win n er

P. 18

M ast er Bu ilder High ligh t

P. 26

Local Associat ion Happen in gs

P. 40

Hou sin g Af f or dabilit y Cr isis

P. 46

Recogn izin g Ou r Spik 2 es 2

South Carolina is experiencing significant growth, attracting more families due to its appealing climate, beautiful beaches, diverse activities, and welcoming people. This influx has been supported by the state's successful efforts in attracting industries and well-paying jobs. However, with this growth comes a pressing need for more housing, as regulatory costs, rising building material prices, and a shortage of skilled labor have led to a shortage of attainable housing.

To address this issue and promote sustainable housing development, the Home Builders Association (HBA) of South Carolina emphasizes three cornerstone principles for policymakers and community leaders: 1. Local Gover n m en t Policies & Pr ocesses: There is a need to identify impediments within local government policies and processes that affect housing investment. Adopting best practices can streamline these processes and remove barriers to development.

2. St at e Au t h or it y: The state must have clear authority to enforce code and land development laws to ensure a consistent and predictable environment for housing investment.

3. Sk illed Tr ades Tr ain in g: Efforts to train and attract individuals to skilled trades must be dramatically increased and sustained over the long term to address the labor shortage in the construction industry.

Local community leaders and elected officials need to recognize the changing landscape of the housing industry. Housing investment should be viewed similarly to other types of economic development investments. Communities aiming to attract jobs must consider their housing stock and the systems in place for land development, new home construction, and renovation of existing homes.

Streamlining review and approval processes is crucial, especially for attainable housing projects, which are disproportionately affected by regulatory costs and delays.

According to the National Association of Home Builders (NAHB), 25% of the cost of a new home is now attributable to regulatory costs, including mandated studies, site reviews, delays, permit fees, and code requirements. Communities that streamline these processes will attract more investment, 3 keeping housing affordable and expanding their population and tax base. (con't)

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Efficient practices will not only benefit builders and developers but also local governments and taxpayers. More families and homes lead to more money for schools and local government, creating a positive feedback loop for community growth.

In 2024, South Carolina is projected to build over 38,564 single-family homes and 10,306 multi-family homes, with an estimated economic impact of: -

$14.38 Billion in income for residents, $2.89 Billion in taxes and revenue for state and local governments, 169,182 new jobs in S.C.

Annually, the impact of these homes includes: -

$2.681 Billion in income for residents, $1.162 Billion in taxes and revenue for state and local governments, 13,540 new jobs in S.C.

New r esiden t ial con st r u ct ion pr odu ces an im m ediat e oper at in g su r plu s t o local gover n m en t s an d a $10.53 Billion su r plu s over 15 year s!Expanding South Carolina?s building industry is essential for job creation and population growth, offering numerous positive impacts for the state.

Rob Clemons, HBASC President

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Sin gle Fam ily St ar t s in M ajor M ar ket s an d St at ew ide

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Regist er Today!

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2024 Legislat ive Session Review

By Alex James, HBA of SC Director of Government Affairs

The 2024 South Carolina Legislative Session came to an end on May 9th when the General Assembly adjourned Sine Die. This was the second year of the two-year session so any bill that had not had not passed both chambers by that date is dead and must start the process over again when the general assembly returns in January, 2025. While the session technically ended at 5pm on May 9th. The General Assembly returned twice after that date to elect judges and to pass the final budget and other bills that were sent to conference committee to work out differences between the two chambers. The following is an overview of the housing industry related bills that were taken up this year.

·H.4086?Our residential builder licensing bill, intended to overhaul the aged statute and help grow the industry, clarify common misunderstandings and provide greater protection to the public through voluntary education and stronger bonds, passed the House unanimously last year before being held up in the final weeks of this year ?s session in the Senate. In the end it appears trial lawyers were worried that the bonding language could make it harder for them to make money from suing builders.

·H.4486-During the final days of the 2023 legislative session, Representative Burns introduced a bill aimed at addressing critical issues surrounding septic tank installations in South Carolina. The bill, which passed unanimously in the House, sought to empower the Department of Environmental Services (DES) to establish a program allowing septic tank installers to conduct field evaluation tests. There was not an appetite for this solution in the Senate and so we worked to amend the bill to instead allow engineers who have taken a class from DES to conduct septic field evaluation tests. In the end the bill was held up in the Senate by those that wanted septic installers instead of engineers and would not yield to a pragmatic approach.

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·S.533/ H.3933?In February 2023, the South Carolina Senate and House introduced legislation aimed at reforming the Palmetto State?s civil liability laws, a move long-awaited by the business community. The South Carolina Justice Act sought to modernize liability laws to ensure that businesses are held accountable only for damages proportionate to their fault in civil lawsuits.

Championed by the South Carolina Coalition for Lawsuit Reform, of which the HBA is a member organization, this bill was crucial for maintaining the state's competitiveness in attracting and retaining job creators while safeguarding the rights of injured individuals. After multiple committee hearings and countless hours of testimony the bill was sent out to the floor of the Senate and ultimately failed to receive a vote. The majority of Senators who opposed allowing the bill to have a vote are trial attorneys. ·S.1017?This bill addresses a side effect of the Low-Income Housing Tax Credit Overhaul bills that have been passed over the last two years that created a loophole where a multifamily development could get a 100% property tax reduction if a non-profit entity was a partner on the project with as little as a 1% stake in the project. Several existing for-profit multifamily complexes took advantage of this loophole by bringing on a nonprofit as a nominal partner thereby reducing their property tax bill by 100% from what they paid the prior year. This bill was passed unanimously by both bodies and links the amount of property tax reduction to the proportion of ownership of the property by a nonprofit up to 50%, at or above which the property receives a 100% property tax reduction, however a last-minute addition by the city of Rock Hill to correlate the area median income to zip code ended up killing the bill. Because of the change the bill went to conference committee and the House and Senate were unable to reach a compromise before they returned to Columbia on June 26th . So this loophole will remain open for another year and many more projects are expected to take advantage of it during that time potentially having significant impacts on municipalities expected property tax revenue. ·S.1021?This bill to extend the Abandoned Buildings Revitalization Act until the end of 2035 was passed by a unanimous vote in the Senate and 98-8 vote in the House. The tax credit may not exceed seven hundred thousand dollars for any taxpayer in a tax year for each abandoned building site.

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W e ap p r eci at e ou r con v en t i on sp on sor s!

H BASC Con v en t i on Oct ober 11-13t h at t h e M ar i n a I n n at Gr an d e Du n es i n M y r t l e Beach .

Pl at i n u m

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Si l v er

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The 2024 Home At t ainabilit y Conference had an impressive t urnout .

Thanks t o our wonderful sponsors:

Wat ch t he conference videos here.

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Ou r t r ip t o D.C. w as f illed w it h m ean in gf u l con ver sat ion s w it h ou r con gr ession al delegat ion . We w ou ld lik e t o t h an k ou r am azin g spon sor s Sou t h east er n In su r an ce Con su lt an t s, LLC an d Execu t ive Con st r u ct ion Hom es Colu m bia!

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Greenville HBA's Spring Golf Tournament was a t remendous success and an absolut e blast !

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Greenville HBA's had an incredible night at t he HBA Spring Block Part y-Night at t he Greenville Drive!

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Congrat ulat ions t o t he winners of t he Anderson HBA's Clay Shoot !

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Members of t he Building Indust ry Associat ion of Cent ral SC (BIA) Bass Tournament was a lot of fun for all.

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Ch ar lest on HBA

Ch ar lest on HBA

Michael Allen, Coast al En gin eer in g &Test in g Todd Anderson, Th e Tr af f ic Gr ou p

Fernando Posada, In t er n at ion al Con st r u ct ion Ser vices Gates Shellhaas, Gr acew or k s Con st r u ct ion

James FitzGerald, Advan t age Elevat or LLC

Christopher Smith, PG Bu ilder Pr o

Mark Gargula, Wor ld In su r an ce

Drew Takach, KB Kit ch en an d Bat h Con cept s

Cameron Gilmore, For ever Law n Ch ar lest on Adam Grass, Hobson Bu ilder s Anthony Jackson, Floor Boss LLC

Lakelan ds HBA

Michael McGuinn, Th e Design er y Roger Medlock, Ar k -La-Tex Fin an cial Ser vices Flavio Mendonca, Floor It an d M oor e David Nilson, Nilson Van & St or age In c.

Vince Simpkins, Blossm an Gas

Jeff Scott, CCS Bu ilder s In c.

Zach Spencer, Bain br idge

Dan Hobbs, Bilt Wise St r u ct u r es

Trey Willis, JW Con st r u ct ion of Ridgelan d LLC Paul Bird, Bir d Bu ilt Cu st om Hom es Kevin Cunningham, Cu n n in gh am Con t r act or s Troy Dolin, Gu t t er Gu y Gu t t er Su pply

Lan cast er HBA

Judso Haley, Todd Haley & Associat es Janna Hart, Car olin a Lan t er n s & Ligh t in g Jonathan Hart, Crawl Logic Zack Middleton, M iddlet on St r u ct u r al an d Design En gin eer in g

Randy Collins, Collin s Realt y In c.

Corey Munson, Residential Structures P.C. Zach Pace, Pace's Com f or t Coolin g Sean Oddis, Spir e Ch ar lest on

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Spar t an bu r g HBA An der son HBA Charlotte Groce, Palm et t o Ou t door Spaces Jeremy Hutchins, Gr een River Log Cabin s Jeff Plunkett, Fr ed An der son Ch evy John Roberts, Home Builders Ins.

Andy Lepin, Hom eTeam Pest Def en se

Mike Beiler, Clim at eM ast er Geot h er m al

Adam Jones, Coast al En gin eer in g &Test in g

Trina Montalbano, D. R. Hor t on In c.

John Roberts, Th e Tr af f ic Gr ou p

John Montgomery, M on t gom er y Developm en t Associat ed Roger Nutt, TNC En gin eer in g LLC

Yor k HBA HBA of Gr eat er Pee Dee

Mark Boyce, Tr u e Hom es Tena Cornwell, Sou t h St at e Ban k Josh Hartsoe, Cr am er Pest Con t r ol Randy Geid, Tr ian gle Br ick

Daniel Krause, Kr au se Ren ovat ion s

Adam Olson, Th r ee Oak s Con st r u ct ion LLC

J. Scott Price, Colt on Bu ilder s In c.

Tim Taylor, Car t er Lu m ber

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Hilt on Head Ar ea HBA

Harley Ashbaugh, AWD of Savan n ah Dalton Cornforth, Palm et t o Ext er m in at or s In c.

Or an gebu r g HBA

Jeff Dinkle, Eco Coast al Hom es Chris Donald, Car olin a Con t r act or s In c.

Randy Downing, CCS LLC Eric Eckert, Epper son Ser vice Exper t s Andrea Eldred, Elem en t Con st r u ct ion Karen Groves, D2R Bu ilder s LLC

Jason Hodge, Th e Bu ildin g Cen t er In c.

Steve Hawley, Th e Hom e Elevat or Lisa Henry, Coast al St at e Ban k s Hugh Hobus, RCH Con st r u ct ion In c.

JT Hooper, Palm et t o Blu f f Bu ilder s Justin Imel, Back 9 Tu r f & Gr een s Dylan Knight, Alside Su pply Donna Lang, Allen Pat t er son Bu ilder s Trey McLaughlin, NFP Coast al Sign at u r e Hom es, In c.

Shauna Phillips, R&D Legal Book k eepin g LLC Mike Trezza, Tr ezza Ter m it e & Pest Con t r ol Jason Wilmott, Un it ed Sit e Ser vices Devin Lynch, Sou t h er n Fen ce Chris Minick, Floor Cover in gs In t er n at ion al of HHI Jonathan Ward, 15 Day Kit ch en an d Bat h LLC Laura Wilson, Set t h e St age Hilt on Head Savan n ah

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Hor r y/ Geor get ow n HBA Hor r y/ Geor get ow n HBA

Amanda Berkman, M er it age Hom es Denise Blackburn Gay, M ar k et in g St r at egies

Jim Alicchio, Hom eTeam Pest Def en se

Jacob Brey, Fir st Ch oice Plu m bin g Ser vices

Josh Barber , WFB FOX TV

Tyler Johnson, Fir st Ch oice Plu m bin g Ser vices

Christian Bassily, Low cou n t r y Ligh t in g St u dio

Sonny Joyner, Bu ilder s Fir st Sou r ce

Jon Bowman, Hom eTeam Pest Def en se

Maddie Koury, WM BF New s

Brent Christensen, Dr eam Fin der Hom es

Christopher Lilly, Gr eat Sou t h er n Hom es

Joseph Dore, Dr eam Fin der Hom es

Maria Lita, WM BF New s

Dawn Ferry, Hom eTeam Pest Def en se

Robert Mosher, Rest or at ion 1

Andrew Finch, Cor n in g Cr edit Un ion

Sharon Navarra, St r ick lan ds Hom e

Vicki Hall, KB Kit ch en & Bat h

Fernando Posada, In t er n at ion al Con st r u ct ion Ser vices

Jim Lee, Palm et t o Ext er m in at or s In c

Noam Pyade, Am er ican a

Charlene Leone, Dom in ion En er gy

Kasey Rogers, Palm et t o Pr ot ect ion Film s

Jenny Littleton, Low cou n t r y Ligh t in g St u dio

Nick Rosier, BELFOR

Chase Button, Beachside Refinishing LLC

Christopher Smith, LG Bu ilder Pr o

Holly Clay, CBM Ser vices

Ryan Spagnolo, TD Ban k

Will Dodson, Gr ey Sh or e Con t r act in g

Jason Tomlinson, TD Ban k

Mark Eudy, Th e Er osion Com pan y

Eric Vizzini, WM BF New s

Rachel Hodges, Blu e Kan gar oo Pack ou t z

Kaleb Wentzel, Rest or at ion 1

Chris Quade, Beach Air LLC Steven Riddei, Hom eTeam Pest Def en se Matt Sedota, Br yn e Acqu ist ion Gr ou p Julia Wellman, Dr eam Fin der Hom es William Adkins, Bat t le LP Gas 37

Shawn Becker, Am er i Bu ilt In c.

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Gr een ville HBA

Gr een ville HBA

Joseph Arrowood, RW Su pply + Design Bob Barreto, Falcon Real Est at e Developm en t Kiersten Bell, LS Hom es Avery Brumlow, M or t on Bu ilder s Brandon Chaves, Ch aves Cu st om Hom es

Sarah Sain, Sain Hom es

Elias Contis, Gr eek Ren ovat ion s

Jeannette Schnell, Coldw ell Ban k er Cain e

Lucy Cruz, J Callah an Con cr et e

Kevin Sexton, Lu t h er & Lew is

Lea Dwyer, DRB Hom es

Lindsey Twining, Reedy Pr oper t y Gr ou p

Steven Dyal, Ber k sh ir e Hat h aw ay Hom eSer vices

Xavier Tiberghien, Par k s Bu ick GM C

Tracie Elliott, Floor & Decor

Christopher Ward, Fir st Nat ion al Ban k of PA

Justin Fowler, Par k s Bu ick GM C

Frank Warren, HM F Am er ican a

Kasey Fowler, Hu n t er Qu in n Hom es LLC

Christopher Barfield, Am er ica's Best Hom e Repair

Wendell Hawkins, Wen dell Haw k in s P.A.

Bob Barreto, Falcon Real Est at e Developm en t

Brent Hawthorne, Ryan Hom es

Carols Beltran, CABA Con st r u ct ion

Gabe Hill, J Callah an Con cr et e

Mike Brown, An vil M ar k et in g Co

Mitchell Jones, M or t on Bu ilder s

Natalia Brown, DRB Hom es

Anna Joseph, Par k s Bu ick GM C

Jordan Bursch, HA Developm en t

Mark Linke, Par k s Bu ick GM C

Sam Butler, Reedy Property Group

David McGinnis, M cGin n is Real Est at e

Dan Butts, Fif t h Th ir d Ban k

Yesenia Mendoza, M or t on Bu ilder s

David Catoe, Hu n t er Qu in n Hom es LLC

Leslie Minnis, Par k Nat ion al Ban k

Brandon Chaves, Ch aves Cu st om Hom es

Stephen Morrison, M or eSu n Tim ber Fr am es

Greg Christofolo, Dr eam zt ech US In c

Santiago Navarro, Taw an da Gr ou p LLC

Elias Contis, Gr eek Ren ovat ion s

Josh ONeal, Air Tigh t Solu t ion s

David Cravey, For t if y Bu ildin g Solu t ion s

Fernando Posada, In t er n at ion al Con st r u ct ion Ser vices

Anderson Drake, Reedy Pr oper t y M an agem en t

Stephanie Przestrzelski, Keller William s Gr een ville Upst at e

Karin Gierman, AHS Upst at e Sou t h Car olin a

Laura Ros, Reedy Pr oper t y Gr ou p Josh Rusher, Tr u m an Bu ilder s

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Morris Hardigree, Fif t h Th ir d Ban k Jodi Hemingway, Floor & Decor

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Gr een ville HBA

BIA of Cen t r al SC

Anastasia Howard, M er it age Hom es of Sou t h Car olin a

Rachel Hurst, Car din al Wast e Ser vices Adam Jones, HM C Bu ilder s In c Fred Mead, Th e Opex Gr ou p Steven Palmer, Sign Per k s

Rob Morris, Plen t eou s Bu ilder Miguel Posada, International Construction Services Pamela Pyms, Pr em ier Sot h ebys In t er n at ion al Realt y

John Roberts, Hom e Bu ilder s In su r an ce SVCS

Craig Richardson, Hoover Bu ildin g & Tr u sses Barbara Ricker, Hom e Advan t age Realt y Cody Shoars, Blan ey Bu ilder s LLC Grayson Vazquez, M u n go Hom es

Jameila Royal, Keller William s Gr een vile Upst at e

Elizabeth Walker, Gu ild M or t gage Com pan y

Scott Sullivan, Bella Syst em s Cu st om Closet

Justin Waring, 4D En gin eer in g

William Taylor, Reedy Pr oper t y Gr ou p

Melanie West, Coldw ell Ban k er Realt y

Calvin Wright, Calvin Wr igh t Design Wor k s LLC

John Wolfe, Br abh am Gr if f in In su r an ce LLC

BIA of Cen t r al SC

Ryan Arnold, Ryan Hom es Joseph Carbonaro, M u n go Hom es Mikie Carroccio, Pu lt e Gr ou p Allison Cranford, TD Bank

Daniel Basham, Cassell Br ot h er s Hom e Ser vices Jennifer Basilico, Van ir In st alled Sales of Colu m bia Keith Berry, M AKK Hom es LLC

Cynthia Giles, Cu t Th r oat M ar k et in g

Grant Haney, M cGu in n Hybr id Hom es

Bob Lewis, M idSou t h Ter m it e & Pest Con t r ol

Taylor Hayes, CAM S

John Meany, Woodf or d Plyw ood

Heath Haywood, CSI Er osion

Scott Morrison, M or r Gr ou p In c

Doug Herlong, BMC

Tracey Perlman, Th e Law Of f ice of Tr acey R. Per lm an

Rus Horton, Fir st Com m u n it y Ban k

Christian Pettway, CS Ext er ior s

Rachael Hurst, Car din al Wast e Ser vices

Clark McCarthy, VaVia Colu m bia

Cole Felschow, Cr yst al Pools LLC Clint Galloway, Gallow ay Fam ily Hom es

Luke Bishop, Bish ops Lan d Ser vice LLC

Byron Lawson, BLB Hom es

Nick Duesler, M cGu in n Hybr id Hom es

Dennis Rabon, Bu dget Blin ds of Nor t h east Colu m bia 40

Craig Richardson, Hoover Bu ildin g & Tr u sses 40

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Near ly 77% of U.S. Hou seh olds Can n ot Af f or d a M edian -Pr iced New Hom e March 2024 Special Study for Housing Economics Na Zhao, Ph.D. Economics and Housing Policy

This article updates NAHB's analysis showing how rising home prices and interests rater affect the affordability of housing. One of the main results is that affordability is a serious problem even before any further price or interest rates increases. NAHB's estimates for 2024 show that 103.5 million households-76.9%of all U.S. households-are already not able to afford a median priced new home ($495,7501 ).

The 2024 estimates further indicate that a $1,000 increase in the median price of a new home would price an additional 106,031 households out of the market, and that a 25-basis point increase in the 30-year fixed mortgage rate (from 6.50% to 6.75%) would price approximately 1/1 million households from the housing market. In addition to the national numbers, the article includes equivalent affordability and priced-out results for individual states and more than 300 metropolitan areas.

Th e Pr iced-Ou t M et h odology an d Dat a The NAHB price-out model uses the ability to qualify a mortgage to measure housing affordability. This method is generally relevant because most home buyets finance their new home purchase with conventional loans, following widely recognized underwriting standards. The standard NAHB adopts for its priced-out estimates is that the sum of the mortgage payment (including the principal amount, loan interest, property tax, homeowners' property and private 42 28 percent of mortgage insurance premiums (PITI), is no more than monthly gross household income.

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As a result, the number of households that qualify for mortgages for a certain priced home depends on the household income distribution in an area and the mortgage interest rate at that time. The most recent detailed household income distributions for all states and metro areas are from the 2022 American Community Survey (ACS). NAHB adjusts the income distributions to reflect the income and population changes that may happen from 2022 to 2024. The income distribution is adjusted for inflation using the 2023 median family income at the state and metro levels and then extrapolated into 2024. The number of households in 2024 is projected by the growth rate of households from 2021 to 2022.

Other key assumptions in the NAHB?s calculation include a standard 10% down payment and a 30-year fixed rate mortgage at an interest rate of 6.55% with zero points. For a loan with this down payment, private mortgage insurance is required by lenders and thus included as part of PITI. The model assumes the annual private mortgage insurance premium is 73 basis points, based on the standard assumption of a national median credit score of 738 and 10% down payment and 30-year fixed mortgage rate. Effective local property tax rates and homeowner insurance rates are derived from the 2022 American Community Survey (ACS), with the U.S. average effective property tax rate being $9.05 per $1,000 of property value and average homeowner insurance at $3.24 per $1,000 of property value

To calculate median new home prices across states and metropolitan areas, NAHB relies on data from the Census Bureau?s Building Permits Survey and the Survey of Construction. Initially, we determine the average value of new home permits for each state and metro area using data from the 2022 Building Permits Survey. It is important to note that permit values typically represent construction costs only and exclude the cost of raw land, brokerage commissions, marketing or financing costs. To convert from average permit values to median new home prices, NAHB employs scaling mark-ups ratios. These ratios are derived by comparing the median new home prices to the average permit values for each division, as estimated from the Survey of Construction. Furthermore, to manage the extreme estimates in median new home prices, NAHB implements a quantile-based flooring and capping method. This method identifies outliers by comparing the estimated median new home prices to the median values of newly built homes from the American Community Survey. The outliers are then adjusted by setting a cap at the 90th percentile value and establishing a floor at the 10th percentile value, making sure that the estimates reflect a more accurate and realistic range of new home prices. Finally, the median new home prices are projected forward to 2024 using the latest NAHB home price forecasts.

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U.S. Pr iced-Ou t Est im at es Under these assumptions, this minimum income required to purchase a $495,750 new home at the mortgage rate of 6.5% is $151,947. With the total number of 134.6 million households in the United States, approximately 103.5 million, or about 76.9%, would not be able to afford a new median priced home valued at $495,750 in 2024. A $1,000 home price increase will further price 106,031 households out of the market for this home. These are the households that can qualify for a mortgage before a $1,000 increase but not afterwards, as shown in Table 1 below.

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NAHB uses similar calculations and assumptions to create a housing affordability pyramid showing the number of households able to purchase a home at each step. For example, the minimum income required to purchase a $150,000 home at the mortgage rate of 6.5% is $45,975. In 2024, about 40.5 million households in the U.S. are estimated to have incomes no more than that threshold and, therefore, can only afford to buy homes priced no more than $150,000. These 40.5 million households form the bottom step of the pyramid (Figure 1). Of the remaining households who can afford a home priced at $150,000, 26.1 million can only afford to pay a top price of somewhere between $150,000 and $250,000 (the second step on the pyramid). Each step represents a maximum affordable price range for fewer and fewer households. Housing affordability is a great concern for households with annual income at the lower end of the distribution.

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St at e an d Local Est im at es The 2024 priced-out estimates for all states and the District of Columbia are shown in Table 2. This table presents the projected 2024 median new home price estimates and the minimum income to secure a mortgage, the number and the percent of households who cannot afford the new homes. It also shows how a $1,000 increase in price could impact the number of households. Vermont stands out as the state with the highest share of households unable to afford the median-priced new home before any price changes, with approximately 92% of its households falling short on the income needed for a mortgage to buy a median-priced new homes. Connecticut and Hawaii follow closely, with 89% and 88.5% of households respectively, facing similar affordability challenges for new homes at the median prices. On the other hand, Virginia is the state with better affordability, where the median new home price is $462,000, however, around 66% of households still find these new homes unaffordable.

Table 3 shows the 2024 priced-out estimates for over 300 metropolitan statistical areas and metro divisions, focusing on those with populations exceeding 650,000. San Jose-Sunnyvale-Santa Clara metro area in California stands out due to its exceptionally high median new home price of $1,685,593, requiring a minimum household income of $487,773.

This makes it the metro area with the highest percentage of households unable to afford the median-priced new homes. In contrast, the Washington, DC metro area presents a more accessible market, where around 37% households are capable of purchasing new median-priced homes. This indicates a relatively higher level of affordability compared to San Jose metro area.

In t er est Rat es The NAHB 2024 priced-out estimates also present how interest rates affect the number of households that would be priced out of the new home market. If mortgage interest rate increase, the monthly mortgage payments will rise as well and therefore higher household income thresholds are needed to qualify for a mortgage loan. Table 4 shows the number of households priced out of the market for a new median priced home at $ 495,750 by each 25 basis-point increase in interest rate from 3.75% to 8.25%. When interest rates increase from 6.5% to 6.75%, around 1.13 million households can no longer afford buying median-priced new homes.

Moreover, about 917,000 households would be squeezed out of the market if interest rate goes up to 7.25% from 7%. This diminishing effect happens because only a few households at the smaller end of household income distribution will be affected. In contrast, when interest rates are relatively low, a 25 basis-point increase would affect a larger number of households at the larger section of the income distribution. If the mortgage interest rate goes down from 6.5% to 5.5%, around 4.4 million more households will qualify the mortgage for the new homes at the 48 median price of $495,750.

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2024 HBASC Executive Committee Pr esiden t : Rob Clem on s, M u r r ells In let Vice Pr esiden t : Eddie Yan dle, Colu m bia Tr easu r er : Dou g Jam es, Ch ar lest on Secr et ar y: Hal Dillar d, Gr eer Im m ediat e Past Pr esiden t : Lou ie Hopk in s, Flor en ce Dist r ict #1 Vice Pr esiden t : An dy Bar ber , Ch ar lest on Dist r ict #2 Vice Pr esiden t : Kevin St eelm an , Colu m bia Dist r ict #3 Vice Pr esiden t : Joh n n y Uldr ick , Gr een w ood Dist r ict #4 Vice Pr esiden t : M ar k Au t or in o, In m an Dist r ict #5 Vice Pr esiden t : Ken Gibson , Har t sville Associat es Vice Pr esiden t : Ben n et t Gr if f in , Colu m bia Legislat ive Ch air per son s: Dar r yl Hall, Flor en ce, An dy Wh it e, Lexin gt on M em ber sh ip Ch air per son : Ed Byr d, Colu m bia NAHB Nat ion al Repr esen t at ive: Br an don Edw ar ds, Hilt on Head NAHB St at e Repr esen t at ive: Bar t Bar t let t , Colu m bia EO Cou n cil Ch air per son : Taylor Lyles, Gr een ville HBASC St af f : Execu t ive Dir ect or : M ar k Nix Dir ect or of Gover n m en t Af f air s: Alex Jam es Dir ect or of Regu lat or y Af f air s: Jam es Gr aves Dir ect or of Accou n t in g: Kim Halt er Dir ect or of Oper at ion s: Tar a M or r ison Dist r ict #1 - Ch ar lest on HBA an d t h e Hilt on Head Ar ea HBA Dist r ict #2 - BIA of Cen t r al S.C., HBA of Lan cast er , HBA of Or an gebu r g/ Bam ber g/ Calh ou n , HBA of Yor k Dist r ict #3 - HBA of Aik en , HBA of An der son , Lak elan ds HBA an d t h e HBA of Ocon ee Dist r ict #4 - HBA of Ch er ok ee, HBA of Gr een ville an d t h e HBA of Spar t an bu r g 52 Dist r ict #5 - Hor r y/ Geor get ow n HBA an d t h e HBA of t h e Gr eat er Pee Dee 52

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