NCBIA February/March 2024 BUILDER Newsletter

North Coast Building Industry Association (NCBIA) BUILDER newsletter is the official newsletter of the NCBIA and is published monthly by the NCBIA. The NCBIA is an affiliate of the Ohio Home Builders Association (OHBA) & the National Association of Home Builders (NAHB). Advertising Policy - The North Coast Building Industry Association reserves the right to reject advertising in the Builder newsletter based on content. Acceptance of advertising does not imply endorsement of the product or service advertised.

NCBIA Office

5321 Meadow Lane Court Suite 23

Sheffield Village, OH 44035

Phone: 440.934.1090

info@ncbia.com | www.ncbia.com

NCBIA Staff

Executive Officer

Judie Docs | judie@ncbia.com

Executive Assistant

LaBreeska Bellan | labreeskancbia@gmail.com

Marketing Associate

Ashlyn Bellan-Caskey | ashlynncbia@gmail.com

2024 NCBIA Officers

President

Tim King, K. Hovnanian Homes

Vice President

Mike Meszes, DRC Construction Co.

Associate Vice President

John Toth, Floor Coverings International Treasurer

Melanie Stock, First Federal Savings of Lorain Secretary

Mike Gidich, Honey Dudes Handyman Service

2024 NCBIA Board of Directors

Sam Hudspath, All Construction Services

Dave Linna, Linna Homes & Remodeling

Sara Majzun, Majzun Construction Co.

Jon Sherer, Paraprin Construction, LLC

Brian Schwab, RestorePro

Jason Rodriguez, The S.J.R Building Co.

Kevin Walker, Walker Wealth Managements & Great Lakes Properties & Investments

NCBIA Life Directors

Jeremy Vorndran, 84 Lumber

Tom Caruso, Caruso Cabinets

Bob Yost, Dale Yost Construction

Liz Schneider Dollar Bank

Mary H. Felton, Guardian Title

Jack Kousma, Kousma Insulation

Jeff Hensley, Lake Star Building & Remodeling

Chris Majzun Jr., Majzun Construction Co.

Chris Majzun Sr., Majzun Construction Co.

Jim Sprague, Maloney + Novotny, LLC

Randy Strauss, Strauss Construction

Tom Lahetta, Tom Lahetta Builders, Inc.

2024 NAHB Delegate

This member represents our local industry in Washington DC

Tim King, K. Hovnanian Homes

NAHB Senior Life Delegate

Randy Strauss, Strauss Construction

Ohio’s State Rep. to NAHB

Randy Strauss, Strauss Construction

OHBA 2024 President

Enzo Perfetto, Enzoco Homes

OHBA Past President

Randy Strauss, 1996

2024 OHBA Trustees

Tim King, K. Hovnanian Homes

John Eavenson, Perpetual Development

OHBA Area 2 Vice-President

Ric Johnson, CAPS Builder & Right at Home Technologies

Table of Contents

6 - Menu of Services

7 - Save the Dates

8 -

2024 International Builders’ Show Attracts Largest Attendance in 15 Years - 2023-2024 NCBIA President

9Our Beginning- 80 Years Ago - Executive Officers Report

10 -

Eye on Housing: New Home Sales Up at the Start of 2024

11 - Eye on Housing: Seven Percent of Builders Now Build Barndominiums

12-13 -

Night at the Races Flyer

14 -

We've Moved!

15-16 -

Eye on Housing: Homeownership is Key to Household Wealth

18 - Thank You SPIKES!

19 - Eye on Housing: Credit for Builders Remains Tight, But Tightening is Less Widespread

21Applying for Membership! Thanks for Renewing! Sorry to See you Go!

24 - NAHB Now:

NAHB/Wells Fargo Housing Opportunity Index (HOI)

25 - Eye on the Economy: Solid Economic Data Indicate a Promising Outlook for Housing

26 - Eye on the Economy: Will Strong Economic Growth Affect 2024 Fed Rate Cuts?

27 -

OHBA Executive VP Column: The NAHB Convention: A Great Event

28-33 -

Thank You to Our Sponsors! 2024 NCBIA Home and Remodeling Show Photo Gallery

34-36Sedgwick Update

37-40NAHB at Work Advocating for Housing

41-42Economic Forecast Flyer

432024 Membership Directory

47-482024 Calendar of Events

49-502024 March General Membership Meeting Flyer

51-55Speedway/Fleetcor Flyers

For

information on any of these products & services, please contact the NCBIA Office at (440) 934-1090 or email judie@ncbia.com

What members are saying: What a great

“ So nice to see new categories and being able to recognize those who do a great job

us.

Such a nice event, I recommend others to attend this in the future.

Save the Date!

Want to be a sponsor for any of these events? Let us know! Sponsor early to get maximum exposure!

Call or email Judie at judie@ncbia.com for marketing opportunities to help your bottom line!

Wednesday, March 20, 2024

March General Membership Meeting

With Carl Harris, NAHB Chairman

5 PM - 7 PM

Tom's Country Place

3442 Stoney Ridge Road Avon, OH 44011

Tuesday, April 16, 2024

Economic Forecast

Presented By: Rob Dietz, NAHB Chief Economist

5:30 PM - 7:30 PM

Tom's Country Place

3442 Stoney Ridge Road Avon, OH 44011

Saturday, April 20, 2024

Night at the Races

5:30 PM

American Legion Post 211 31972 Walker Road Avon Lake, OH 44012

If you would like to participate in a committee, please email Judie Docs at judiencbia@gmail.com.

Check the website at www.ncbia.com for up-to-date changes, additions, and corrections to these events!

Do you have some business news to share?

Business anniversaries, accomplishments, awards, publications, etc.? Send to judie@ncbia.com. We want to hear from you!

2024 INTERNATIONAL BUILDERS' SHOW

Attracts Largest Attendence in 15 Years

More than 76,000 builders, remodelers, developers, and other home building professionals filled the exhibit halls of the Las Vegas Convention Center as the National Association of Home Builders (NAHB) hosted the 80th NAHB International Builders’ Show® (IBS), the largest annual light construction show in the world, Feb. 27-29. This milestone attendance, representing more than 100 countries and the highest level since 2009, reflects the bullish outlook of the residential construction industry.

The show had amazing energy! Attendees visited more than 1,800 exhibitors – including 800 new exhibitors – over 678,000 net square feet, exploring innovative building products and technology to advance the industry and enhance new homes. 100s of incredible new products and trends made their debut. Live demos taught new techniques and new uses for products.

The show floor, education sessions, networking events and social events created 1,000s of connections with some new suppliers and vendors. Awards celebrated the best in the industry. Reflecting the strong growth of the show over its 80-year history, the size of the show floor increased nearly 12% from the 2023 show.

“The energy and enthusiasm of attendees on the exhibit floor matched the positive feedback we received from our exhibitors,” said NAHB Chief Revenue Officer Geoff Cassidy. “To help attendees maximize their experience; we organized this year’s exhibit floor into six distinct product segments. Many IBS attendees told us they wanted floor segmentation, so this was a direct result of us listening to their needs.”

This year also marked the 11th anniversary of Design & Construction Week® (DCW), the colocation of IBS and the National Kitchen & Bath Association’s (NKBA’s) Kitchen & Bath Industry Show (KBIS). DCW drew over 117,000 attendees, and more than 2,400 exhibitors occupied over one million net square feet of indoor and outdoor exhibits.

IBS attendees enhanced their industry knowledge by attending any of more than 120 education sessions led by experts on a wide range of industry topics, including artificial intelligence, building technology, research, and trends. Attendees also took advantage of numerous networking events throughout week and visited The New American Home™ that showcased the latest trends and innovations in home building.

Think about what you struggle with and there is somebody at the show that can help you with it. There is nothing that you run into at any point in your business that you can’t find an answer to there. Next year, the show will return to Las Vegas, Feb. 25-27.

Tim King, K. Hovnanian Homes

by Judie Docs, CSP, MCSP, MIRM, CMP, CGP

Our Beginning - 80 Years Ago

1970-1980 (Part 2 of 4)

Years Ago

OUR BEGINNING80

Economic Rollercoaster – 1970’s

The 1970’s brought to Lorain County periods of both high and low economic change. The early 70’s witnessed a stable housing market as well as an upsurge in apartment building. The mid 70’s brought very high unemployment to our area causing an extreme decrease in memberships.

The major issue for builders was the curtailment of the residential gas supply in our area resulting in many developers redesigning utility services for their developments.

From the fall of 1974 to October 1976 the association was without an executive officer. In 1975, Carmine Torio was hired to serve as the new executive officer and our association was relocated to Sheffield Shopping Center.

The ‘70s, to paraphrase the Charles Dickens quote, “It was the best of times; it was the worst of times.” Early on was stable with increased apartment construction and then traumatic high unemployment caused the bottom to drop out.

Decade of Change – 1980

It was tough being in the building trades in the early ‘80s. If a deep recession wasn’t enough, all-time interest rates, as high as 21%, seemingly was a conspiracy to strangle any growth in the housing industry. Literally, all new construction was halted, and local builders turned to remodeling to stay alive. Foreclosures reached staggering heights.

The Remodelers® Council was formed to support the many contractors who were turning to remodeling to compensate for the downturn in housing starts. By the end of 1983, those builders still around could see signs of an improving economy as interest rates began to fall. Many builders had gone out of business or simply quit. Those who had struggled and survived became better builders; more knowledgeable about their industry, more competent business managers and much more professional. In an effort to address a membership which had declined to a low of 164 in 1984, the association decided to more accurately reflect the business of its membership by changing its name to Building Industries Association of Lorain County.

The later years of 1980’s proved to be profitable for our association as our industry again led the way out of a recession. The association began to formulate plans for the construction of its own office building.

NEW HOME SALES UP at the Start of 2024

Stable mortgage rates at the beginning of 2024 helped new home sales to increase in January. Sales of newly built, single-family homes in January increased 1.5% to a 661,000 seasonally adjusted annual rate from a downwardly revised reading in December, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in January is up 1.8% from a year earlier.

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 January reading of 661,000 units is the number of homes that would sell if this pace continued for the next 12 months.

New single-family home inventory in January remained elevated at a level of 456,000, up 3.9% compared to a year earlier. This represents an 8.3 months’ supply at the current building pace. A measure near a six months’ supply is considered balanced.

BY: DANUSHKA NANAYAKKARA-SKILLINGTON

A year ago, there were 72,000 completed, ready-to-occupy homes available for sale (not seasonally adjusted). By the end of January 2024, that number increased 19.4% to 86,000. However, completed, ready-to-occupy inventory remains just 19% of total inventory, while homes under construction account for 58% of the inventory. The remaining 23% of new homes sold in January were homes that had not started construction when the sales contract was signed.

The median new home sale price in January was $420,700, up 1.8% from December, but down 2.6% compared to a year ago. In terms of affordability, the share of entry-level homes priced below $300,000 has been steadily falling in recent years. Only 15% of the homes were priced in this entry-level affordable range, while 34% of the homes were priced above $500,000. Most of the homes were priced between $300,000-$500,000.

Regionally, on a year-over-year basis, new home sales are up 4.9% in the Northeast and are up 57.0% in the West but down 4.1% in the Midwest and down 13.5% in the South.

SEVEN PERCENT OF BUILDERS Now Build Barndominiums

Over the past decade, use of the term “barndominium” (indicating a structure that is, in some sense, a combination barn and condominium) has become increasingly widespread in real estate media outlets. In fact, the term has become popular enough for NAHB to include a question about it in its survey for the February 2024 NAHB/Wells Fargo Housing Market Index. In response to that survey, a total of 7% of single-family builders reported that they did, indeed, build barndominiums sometime during the past 12 months.

That result, however, leaves open the question of what a builder means by a barndominium. Unlike a term with a consistent definition maintained by, say, an academic organization or government agency, “barndominium” has meant different things to different reporters over the years. When the term was first gaining popularity, reporters were usually using it to describe a metal frame structure that was used as a primary residence. But that usage has been far from consistent.

BY: PAUL EMRATH

When NAHB’s builders were asked about the type of barndominiums they built, the vast majority (70%) indicated that their barndos were a combination of residential space and a large shop area—a criterion that doesn’t even consider the structure’s framing. The percentages referring to framing-based criteria were smaller but still significant: 30% of builders reported that their barndos were a combination of traditional residential and post-frame construction, and 26% said they were post-framed residential structures with sheet metal siding (26%). Only 9% said their barndos were created by actually converting a barn into a primary residence.

Whichever of these techniques a builder uses, the result of creating a barndominium is a new housing unit which, in the typical jurisdiction, requires a residential building permit.

Night at the Races!

April 20th, 2024

Time:

Doors Open: 5:30pm

Dinner: 6:30pm

Races: 7:30pm

Your

American Legion Post 211

31972 Walker Road

Avon Lake, Ohio

$25 per person

*Includes Buffet Dinner, Desserts and Cash Bar

*21 and Older Only Please

Sponsorship Opportunities

Win Place Or Show Sponsor - Sold Out!

•Includes 8 tickets to the event

•Logo on Placemats and On Program Cover, Mic Time, Verbal Recognition, and Ad on All Social Media Platforms

Stable Sponsor: $1000 - Unlimited

•Includes 8 tickets to the event,

•Logo on Placemats and in Program, Mic Time, Verbal Recognition

Winners Circle Sponsor: $500 - Unlimited

•Includes 4 tickets to the Event

•Logo on Table Placemats and in Program, Verbal Recognition

Bar Sponsor: $400 - Only 1 Available

•Includes 2 tickets to event

•Logo on Napkins for Bar, Ad in Program

Name a Race**: $150 - Only 8 Available

•Listed in Program and Announced During Racing Event.

Table Sponsor: $100 - Unlimited

•Ad in program and on Placemats;

•Verbal recognition

Name a Horse**: $20 - Only 90 Available

•Horse Name and Owner Listed in Program and Announced During Racing Event.

•If Your Horse Wins its Race You Win $50!

** If You Choose to “Name a Horse” or “Name a Race” a Committee Member Will Reach Out to You

Prior to the Event for Naming Selections

Questions? Call a Committee Member:

Sara Majzun 440-752-7061

John Toth 216-409-7277

Jeremy Vorndran 440-213-6729

HOMEOWNERSHIP IS KEY to Household Wealth

Homeownersip provides a wide range of benefits to households. In addition to providing households with a stable place to live, homeownership also offers an opportunity for households to accumulate assets and build wealth over time through equity. As of 2022, 66.1% of U.S. households owned their homes. For families that owned a home, the median net housing value (the value of a home minus home-secured debt) increased from $139,000 in 2019 to $201,000 in 2022, as home prices rose, and home mortgage debt was approximately flat1.

In this article, we use the 2022 data from the Survey of Consumer Finances (SCF) to examine household balance sheets, especially their primary residence, across age and education categories. The 2022 SCF is a detailed triennial cross-sectional survey of U.S. family finances, published by the Board of Governors of the Federal Reserve System. Compared to the quarterly Financial Accounts of the United States (previously known as the Flow of Funds Accounts), which provides aggregate information on household balance sheets, the SCF provides family-level data2 about U.S. household balance sheets every three years since 1989.

Homeownership plays an integral role in a household’s accumulation of wealth.

According to the analysis of the 2022 SCF, nationally, the primary residence remained the largest asset category on the balance sheets of households in 2022 (as shown in Figure 1 above). At $40.9 trillion, the primary residence accounted for more than one quarter of all assets held by households in 2022, surpassing business interests (20%, $30.8 trillion), other financial assets3 (19%, $29.8 trillion) and retirement accounts (15%, $23.8 trillion).

BY: JING FU

Playing an important role in household wealth accumulation, the primary residence not only represents the largest asset category on the household balance sheet, but also is a widely held category of nonfinancial assets by households. As mentioned earlier, about two out of every three households, 66%, owned a primary residence in 2022. Within the categories of financial assets, just over half of households, 54%, held retirement accounts, and 21% of households owned either stocks or bonds. Other financial assets, which were held by 99% of households, include items such as checking accounts, money market accounts, and prepaid debit cards, which are often held more to facilitate financial transactions than to build wealth.

In Figure 2, the bars represent the distribution of major assets on household balance sheets by age categories in 2022.

The results shown in Figure 2 suggest that households generally accumulate more assets as they age. Total assets were $7.6 trillion for households under age 35, while they were $65.9 trillion for households aged 65 or older. The aggregate value of assets held by families where the head was aged 65 or older was approximately nine times larger than those held by families where the head was under age 35. The increases in the total assets among age groups indicate that the value of assets grows with age groups.

Moreover, the distribution of major assets on household balance sheets varies by age group. Across age groups where households were under the age of 65, the aggregate value of the primary residence was the largest asset category on these households’ balance sheets. For households aged 65 or older, the primary residence became the second largest asset category, less than other financial assets.

HOMEOWNERSHIP IS KEY to Household Wealth (cont.)

Although the aggregate value of the primary residence increases with age, partly reflecting higher homeownership rates across age categories, the aggregate value of the primary residence as a share of total assets declined with age, as shown in Figure 3. The decline in the share of total assets represented by the aggregate value of the primary residence was offset by growth in the share of other asset categories in aggregate, most notably stocks and bonds, other financial assets, and retirement accounts.

BY: JING FU

An analysis of the SCF reveals that higher educational attainment is associated with higher value of asset holdings. The aggregate value of assets held by households with a bachelor’s degree or higher was five times higher than the aggregate value of assets held by those with some college or associate degrees.

Notably, the primary residence remains the largest asset category for each educational attainment category. However, the aggregate value of the primary residence as a share of total assets varies by educational attainment categories. For households with a bachelor’s degree or higher, the aggregate value of the primary residence as a share of total assets was 23%, as these households held a greater amount of other assets, such as business interests, other financial assets, and retirement accounts. Meanwhile, for households with no high school diploma or GED, the primary residence accounted for half of their total assets.

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SUPER SPIKE (250-499 SPIKE CREDITS)

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EYE ON HOUSING CREDIT FOR BUILDERS REMAINS TIGHT, But Tightening is Less Widespread

During the fourth quarter of 2023, credit for residential Land Acquisition, Development & Construction (AD&C) remained tight, according to both NAHB’s survey on AD&C Financing and the Federal Reserve’s . However, the tightening was not as widespread as it was in recent quarters. The net easing indices derived from both surveys were negative once again in the fourth quarter, indicating net tightening of credit, but not as negative as they were in the third quarter. The NAHB index posted a reading of -19.7, compared to -49.3 in the third quarter, while the Fed’s index posted a reading of -39.7 compared to -64.9 in the third quarter. Although both the NAHB and Fed indices have been in negative territory for eight consecutive quarters, the fourth quarter 2023 readings were as close to positive as either index has been since the first quarter of 2022.

According to the NAHB survey, the most common ways in which lenders tightened in the fourth quarter were by reducing the amount they are willing to lend (cited by 73% of the builders and developers who reported tighter credit conditions), increasing the interest rate on the loans (69%), and lowering the allowable Loan-to-Value or Loanto-Cost ratio (65%).

Meanwhile, results from the NAHB survey on the cost of the credit were mixed. Quarter-over-quarter, the average contract rate remained the same on loans for land acquisition at 8.31% but increased from 7.78% to 8.12% on loans for land development, and from 8.37% to 8.40% on loans for pre-sold single-family construction. In contrast, the average contract rate declined from 8.66% to 8.41% on loans for speculative single-family construction.

BY: PAUL EMRATH

The average initial points paid on the loans declined from 0.86% to 0.71% on loans for land acquisition and from 0.93% to 0.73% on loans for speculative single-family construction but increased from 0.58% to 0.60% on loans for land development, and from 0.86% to 1.08% on loans for pre-sold single-family construction that are tracked in the NAHB AD&C survey.

The above changes caused the average effective interest rates (rate of return to the lender over the assumed life of the loan, taking both the contract interest rate and initial points into account) to move in different directions. There was a relatively small decline (from 10.85% to 10.58%) on loans for land acquisition, and a more substantial decline (from 13.74% to 12.96%) on loans for speculative singlefamily construction. On the other hand, the average effective rate increased from 10.76% to 11.25% on loans for land development, and from 14.57% to 15.65% on loans for presold single-family construction.

More detail on credit conditions for builders and developers is available on NAHB’s AD&C Financing Survey web page.

Danny Reaser, On Time Gutter, LLC

Kyle Brown, On Time Gutter, LLC

Steve Whitman, Advanced Comfort Systems

Jake Berger, All Construction Services

Kenneth Hutman, B.W. Plumbing Company

Tim Hinkle, Green Quest Homes, LLC

Jeff Reichert, J.L. Reichert Paving, Inc.

Max Denny, J&M Custom Construction, LLC

Jim Tipple, Maranatha Custom Homes, Inc.

John Daly, Network Land Title Agency

Tracy Goldsmith, Northern Ohio Basement Waterproofing, Inc.

Pamela Stewart Wells, Stewart's TV & Appliance

James Sturgill, Sturgill's Drywall, Inc.

Tom Lahetta, Tom Lahetta Builders, Inc.

Robert Palmer, Weed Pro

NAHB NOW

NAHB/Wells Fargo Housing Opportunity Index (HOI)

The NAHB/Wells Fargo Housing Opportunity Index (HOI) for a given area is defined as the share of homes sold in that area that would have been affordable to a family earning the local median income, based on standard mortgage underwriting criteria. Therefore, there are really two major components — income and housing cost.

Current Data

In all, just 37.7% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $96,300. This is nearly identical to the 37.4% posted in the third quarter of last year, which was the lowest reading since NAHB began tracking affordability on a consistent basis in 2012.

The NAHB/Wells Fargo Housing Opportunity Index (2012-Current)

The NAHB/Wells Fargo Housing Opportunity Index: Complete History by Metropolitan Area (2012-Current)

The NAHB/Wells Fargo Housing Opportunity Index: History of Least and Most Affordable Areas

The NAHB/Wells Fargo Housing Opportunity Index:

Complete Listing by Affordability Rank

The NAHB/Wells Fargo Housing Opportunity Index:

Complete Listing, Sorted Alphabetically

The NAHB/Wells Fargo Housing Opportunity Index: Least and Most Affordable Areas by Population

The NAHB/Wells Fargo Housing Opportunity Index: Regional Listing by Affordability Rank

The NAHB/Wells Fargo Housing Opportunity Index: Regional Listing, Sorted Alphabetically

Methodology

For income, NAHB uses the annual median family income estimates for metropolitan areas published by the Department of Housing and Urban Development. NAHB assumes that a family can afford to spend 28 percent of its gross income on housing; this is a conventional assumption in the lending industry. That share of median income is then divided by twelve to arrive at a monthly figure.

On the cost side, NAHB receives every month a CD of sales transaction records from CoreLogic. The data include information on state, county, date of sale, and sales price of homes sold. The monthly principal and interest that an owner would pay is based on the assumption of a 30-year fixed rate mortgage, with a loan for 90 percent of the sales price (i.e., 10 percent downpayment). The interest rate is an average of the 30-year fixed effective rate from Freddie Mac’s Primary Mortgage Market Survey during that quarter. In addition to principal and interest, cost also includes estimated property taxes and property insurance for that home. This is based on metropolitan estimates of tax and insurance rates from the most recent American Community Survey. Mortgage insurance is not currently a component of the HOI.

Therefore, for each record, there is an estimated monthly cost and available income share. The HOI is the share of records in a metropolitan area for which the monthly income available for housing is at or above the monthly cost for that unit.

SOLID ECONOMIC DATA INDICATE a Promising Outlook for Housing

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

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

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

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

BY: ROBERT DIETZ

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

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

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

WILL STRONG ECONOMIC GROWTH Affect 2024 Fed Rate Cuts?

Economic growth has outperformed consensus forecasts (including NAHB’s) as the economy continues to expand despite elevated interest rates. Real gross domestic product (GDP) increased at an annual rate of 3.3% in the fourth quarter of 2023, following a striking 4.9% gain in the third quarter. This marks the sixth consecutive quarter of growth. NAHB’s forecast was for growth near a 1% annualized rate. For all of 2023, real GDP increased 2.5%, slightly better than NAHB’s forecast of 2.4%.

The labor market continues to show strong performance as well. Total nonfarm payroll employment increased by 353,000 in January, faster than the upwardly revised increase of 333,000 jobs in December. Despite restrictive monetary policy, about 6.8 million jobs have been created since March 2022, when the Fed enacted the first interest rate hike of this cycle. In January, the unemployment rate remained at 3.7% for the third consecutive month. In the last 12 months, residential construction has added 60,100 jobs on a net basis, including 2,700 jobs in January. The number of open construction sector jobs was relatively unchanged in the most recent data, declining from 470,000 in November to a still elevated 449,000 in December. A recent, increasing trend for unfilled construction sector positions is consistent with the industry’s ongoing skilled labor shortage.

Do these strong economic growth and labor market reports suggest inflation risk has returned? According to the Federal Reserve’s January meeting, that does not appear to be the case. For the fourth consecutive meeting, the Fed’s monetary policy committee held the federal funds rate constant at a top target of 5.5%. The Fed is now setting the ground for rate cuts later in 2024 by noting that risks to its inflation and labor market objectives have moved into “better balance.” The strong economic data almost certainly rule out a first rate cut for this cycle in March. However, two or three rate cuts during the second half of 2024 appear likely as inflation moderates and the Fed cuts nominal rates to maintain constant, inflation-adjusted monetary policy. For long-term rates, the opposing pressure from strong economic performance (upward) and expected nominal rate easing from the central bank (downward) are likely to offset in the near-term, leaving the 10-year Treasury rate near 4% and mortgage rates in the mid-6% range.

BY: ROBERT DIETZ

Ongoing challenging affordability conditions are restraining sales activity for the overall housing market. Consequently, the overall homeownership rate fell to 65.7% in the final quarter of 2023, while the rate for those under age 35 decreased to 38.1%. This age group, particularly sensitive to mortgage rates and the inventory of entry-level homes, saw the largest decline among all age categories.

And while a persistent lack of existing home inventory is depressing existing home sales, it helped boost sales of newly built, single-family homes by 8% in December. On an annual basis, new home sales totaled 668,000 in 2023, up 4.2% from 2022. New home sales will face increased competition in 2024 as existing home inventory increase with a gradual loosening of the mortgage rate lock-in effect.

Besides increased competition from the resale market, builders noted in a recent NAHB survey several more of the top challenges they expect to face in 2024. According to the January NAHB/Wells Fargo Housing Market Index, 77% of builders expect high interest rates to be a problem in 2024 (down from 90% in 2023). Only about half (52%) of builders cited rising inflation as a concern for 2024 (down considerably from 83% in 2023). And the issue experiencing the largest rise of concern, dwindling supply of lots, moved from being cited by 57% of builders in 2023 to 64% in 2024. This factor is a natural consequence of improving demand and the lagging effects of tight construction financing, particularly for private builders.

THE NAHB CONVENTION: a Great Event

I’m off to the IBS 2024. This event is a showcase for our industry and the many services and benefits they provide for all in our business across America. Tens of thousands of members will attend and over one million square feet of exhibitor space will be showcasing the latest products available. Moreover, the educational sessions are on the cutting edge of the information you need to be successful.

NAHB, our federal partner, will be reviewing the latest on the legislative, legal, and regulatory front. Let me assure you all those agendas are full. These agendas are a great example of your association asserting and advocating on your behalf. A big question, now in the formulation stages, is who may be controlling the federal government next year? There is a lot to think about on that point.

OHBA continues its appointed path to represent the industry before state government. In just a few weeks, we will be presenting an up-to-the-moment status on many important issues. The upcoming Ohio primary will result in some, possibly, game changing results. We will be discussing that activity as well.

We look forward to seeing you in Columbus March 11-12, 2024, at our Spring Organizational Meeting at the Hilton Easton.

Ohio Home Builders Association

Phone- 614/228-6647

by Vincent J. Squillace, CAE, OHBA Exec. VP

Fall protec+on & working from heights

The Occupa*onal Safety and Health Administra*on's (OSHA's) Fall Protec*on standard focuses primarily on the construc*on industry. However, it pertains to all companies regardless of their opera*on if they perform work at heights. Although the standard falls under the Construc*on Industry, OSHA can use the Construc*on Fall Protec*on standard against any company if they iden*fy a poten*al fall hazard. General Requirements for Fall Protec*on, 29 CFR 1926.501 and Training Requirements for Fall Protec*on, 29 CFR 1926.503 are almost always found on OSHA’s Top Ten viola*ons, year aRer year. It is essen*al to evaluate if your company falls under these standards.

Since the Fall Protec*on standard includes a large number of individual regula*ons, it is important to understand what the specific rules are that are commonly violated. Here are the top 5 sub-sec*ons OSHA is ci*ng companies for under General Requirements for Fall Protec*on.

29 CFR 1926.501, General Requirements for Fall Protec*on

1) 1926.501(b)(13) – States that anyone performing construc*on work at heights of 6 feet or more shall be protected from falls using approved guardrail systems, safety net systems, or personal fall arrest systems.

2) 1926.501(b)(1) – Employees working on plaXorms 6 feet or higher with unprotected sides or edges shall be protected by guardrail systems, safety net systems, or personal fall arrest systems.

3) 1926.501(b)(10) – Employees engaged in roofing ac*vi*es on low-slope roofs with unprotected sides and edges 6 feet or more above lower levels shall be protected by use of a guardrail systems, safety net systems, or personal fall arrest systems.

4) 1926.501(b)(11) – Steep roofs that are 6 feet or higher from a lower level shall be protected from falling by guardrail systems with toeboards, safety net systems or personal fall arrest systems.

5) 1926.501(b)(4) – Holes- Each employee on walking/working surfaces shall be protected from falling through holes (including skylights) more than 6 feet above lower levels, by personal fall arrest systems, covers, or guardrail systems erected around such holes. Addi*onally, employees must be protected from tripping hazards and employees below must be protected from falling objects from holes.

These five cita*ons tell us that if your employees are working at heights 6 feet or higher in the construc*on industry, you must have some type of fall protec*on. Keep in mind that this is for Construc*on. If you are in the General Industry, the height is 4 feet, the Shipyard Industry is 5 feet and the Longshoring Industry is 8 feet.

OSHA suggests three types of fall protec*on employers can use to protect workers.

1) Personal fall arrest systems – System used to safely stop (arrest) a worker who is falling from a working level. Specifics on Fall Arrest Systems can be found at 29 CFR 1926.502(d).

2) Safety net systems - Safety net systems are designed to catch a falling worker. Safety nets are intended to decrease the fall distance, absorb the energy of a fall, and reduce the likelihood or seriousness of an injury. Specifics on Safety Net Systems can be found at 29 CFR 1926.502(c).

3) Guardrail systems – Guardrail systems are barriers erected to prevent workers from falling to lower levels. Specifics on Guardrail Systems can be found at 29 CFR 1926.502(b).

29 CFR 1926.503, Training Requirements for Fall Protec*on

Here are the top five sub-sec*ons OSHA is ci*ng companies for under Training Requirements for Fall Protec*on.

1) 1926.503(a)(1) –Employees who are exposed to fall hazards must be appropriately trained on how to recognize and correct those hazards.

2) 1926.503(b)(1) – The wriaen cer*fica*on record shall contain the name or other iden*ty of the employee trained, the date(s) of the training, and the signature of the person who conducted the training or the signature of the employer.

3) 1926.503(a)(2) – Employer shall ensure each employee has been trained, as necessary, by a competent person. (94) Competent Person - one who is capable of iden9fying exis9ng and predictable hazards in the surroundings or working condi9ons which are unsanitary, hazardous, or dangerous to employees, and who has authoriza9on to take prompt correc9ve measures to eliminate them.

4) 1926.503(c)(3) – Inadequacies in an affected employee's knowledge indicate that the employee has not retained the required understanding or skill.

5) 1926.503(c) – Retraining. If you feel an employee does not have the understanding or required skill aRer training, they shall be retrained.

These 5 cita*ons are telling us that employees were not trained in using fall protec*on, unable to iden*fy a poten*al fall hazard and unable to retain the knowledge of fall hazards, even aRer the training. Addi*onally, employers failed to document training for employees.

Fall protec*on and training con*nue to be a serious problem in the workplace and they con*nue to appear on OSHA’s Top Ten list. To iden*fy poten*al hazards in your workplace or the job site, compare the cita*ons above and see if your organiza*on complies with them. If you iden*fy any gaps, take the necessary steps to close those gaps, protect employees and minimize poten*al fines.

If you need help iden*fying poten*al hazards in your workplace, please contact Andy Sawan, Risk Services Specialist at Sedgwick at andrew.sawan@sedgwick.com or 330-819-4728.

Employer Handicap Reimbursement Program name change

The Bureau of Workers’ Compensa3on (BWC) Employer Handicap Reimbursement Program is designed to encourage employers to hire and retain employees with pre-exis3ng medical condi3ons. In some circumstances the employer may be eligible for reimbursement of a percentage of claim charges if an employee with a pre-exis3ng condi3on suffers a lost 3me industrial injury or occupa3onal disease and documenta3on supports that the preexis3ng condi3on delayed the employee’s recovery.

The BWC has recently proposed terminology changes related to this program. Effec3ve April 6, 2023, Ohio Revised Code 4123.343 was revised, and the term “handicapped employee” was replaced with “employee with a disability”. To align with the 2023 change, the BWC is upda3ng references from “handicap reimbursement” to “disability relief”. These updates affect code terminology only and do not change program eligibly criteria.

To prepare for this upcoming terminology change, Sedgwick has begun upda3ng correspondence materials to reflect the change from “handicap reimbursement” to “disability relief” and expect those updates to be completed soon. Although the program name is changing, Sedgwick cost containment services will con3nue to be best-inclass. Our dedicated team of experienced disability relief colleagues will con3nue to review eligible claims for relief opportunity, file disability relief applica3ons, and achieve favorable outcomes on behalf of our clients.

If you have any ques3ons, contact our Sedgwick program manager, Dominic Po3na at 614-579-4723 or dominic.po3na@sedgwick.com

NAHB at Work: Advocating for Housing

NAHB’s Government Affairs Team Posts Key Wins for Our Members in 2023

In a year of hyper-partisan gridlock that produced less than two dozen bills enacted into law (the fewest number in decades), NAHB was able to establish a formidable presence on Capitol Hill and move the ball forward on a number of high -priority legislative objectives.

Congressional Hearings: A Quick Start Out of the Gate

In a sign of NAHB’s clout, the association was front and center at two congressional hearings at the start of the new Congress.

NAHB Chairman Alicia Huey on Feb. 8 testified before House lawmakers on the Biden administration’s new waters of the U.S. (WOTUS) rule, calling it “fatally flawed” and urging lawmakers to direct the Environmental Protection Agency to implement a new durable and practical definition of WOTUS. Texas builder Frank Murphy testifie d before the House Small Business Committee against the WOTUS rule on March 8, and these efforts led to both the House and Senate using a rarely used Congressional Review Act to pass a joint resolution of disapproval calling on Biden to rescind the WOTUS rule .

On Feb. 9, Chief Economist Robert Dietz testified before the Senate Banking Committee on the barriers the industry faces to increase the production of quality, affordable housing. Dietz said that boosting housing production is the best way to ease the affordability crisis and called on Congress to pass legislation to alleviate supply -side bottlenecks, ease burdensome federal regulations and promote careers in the skilled trades.

From February through November, NAHB testified before Congr ess six times on a host of issues of importance to the housing industry, including the need to:

• Help builders boost the housing supply to ease growing housing affordability challenges;

• Repeal inefficient regulatory rules; and

• Speed up permit approval times .

Legislative Conference

Yields Key Wins

On June 7, more than 700 NAHB members participated in our annual Legislative Conference and went to Capitol Hill to discuss critical housing issues with their lawmakers. At the top of the agenda was the need to:

• Increase the production of distribution transformers and oppose efforts by the Department of Energy (DOE) to increase the energy conservation standards for the production of transformers because it will severely exacerbate the current supply shortage.

• Curb excessive regulations that are harming housing affordability.

• Take a stand against excessive energy codes and repeal $1 billion in grants provided to state and local governments to ad opt updated energy codes that are more costly and restrictive.

• Support job training programs to help ease the construction industry’s severe workforce shortage and to fully fund the Job Corps program, which is a vital source of skilled labor for our industry.

It is no coincidence that one week after the Legislative Conference, the House approved the REINS Act. The legislation would restore meaningful congressional oversight to regulator y rulemaking by requiring Congress to approve all federal agency regulations that have an annual economic impact of $100 million or more.

Gas Stoves

• Again, days after the Legislative Conference, the House approved two NAHB-supported gas stove bills that would defend consumer access to gas stoves and ensure that Americans have the option of using natural gas to fuel their homes.

Transformers

• On June 15, Rep. Richard Hudson introduced the Protecting America’s Distribution Transformer Supply Chain Act (H.R. 4167), which would repeal the DOE’s authority to implement or enforce any energy efficiency standards for distribution transformer s for the next five years. Thanks to NAHB’s efforts, the House Energy and Commerce Committee passed H.R. 4167 in December

• The Senate Appropriations Committee in July passed la nguage that includes $1.2 billion in supplemental funding to boost the production of distribution transformers.

• And at NAHB’s urging, 47 bipartisan senators on June 1 sent a letter to DOE Secretary Jennifer Granholm that called on the DOE not to move forward on its proposed transformer rule because it will exacerbate an already acute supply chain shortage.

Codes

• NAHB was able to get two bills passed in the House the Lower Energy Costs Act (H.R. 1) and the Limit, Save, Grow Act of 2023 (H.R. 2811) that would repeal the $1 billion energy code grant program. Companion legislation to H.R. 2811 (the Homeowner Energy Freedom Act, S. 2806) was introduced in the Senate in late summer.

• At NAHB’s urging, the House on Dec. 11 passed the Promoting Resilient Buildings Act (H.R. 5473), which would allow FEMA to consider whether a jurisdiction has adopted one of the two latest editions of building codes, rather than just the single latest edition , when awarding funds from its pre-disaster mitigation program.

• NAHB continues to pursue legislative solutions to prevent a proposed rule that sets the 2021 IECC as the minimum energy standard for HUD - and USDA-financed new construction housing. Twenty-six senators sent a letter to HUD Sec. Marcia Fudge and USDA Sec Tom Vilsack urging them to reconsider this proposal, and legislation to prevent implementation of this rule was narrowly defeated in the Senate.

Tax Policy

• The House and Senate on May 11 introduced the Affordable Housing Credit Improvement Act, legislation that would improve the Low-Income Housing Tax Credit and allow builders to increase production of badly needed affordable housing. This bill garnered the most bipartisan support of any tax bill in this current session of Congress.

Workforce/Labor

• The House Committee on Education and the Workforce on Dec. 12 approved NAHBsupported legislation (A Stronger Workforce for America Act, H.R. 6655) that would reaffirm congressional support for Job Corps and help address the nation’s skilled labor shortage. NAHB also fought for Job Corps funding through the appropriations process.

State and Local: NAHB Gives Nearly $300,000 to 18 HBAs in 2023

While NAHB has established a well -deserved reputation on Capitol Hill as an elite power player that wields influence to get pro -housing bills introduced and passed, the association’s Intergovernmental Affairs team is also delivering concrete results by fighting every day on

behalf of our state and local home builders associations on major issues that affect our members’ bottom lines. In 2023, NAHB tra cked 360 housing-related bills across all 50 states. Through its State and Local Issues Fund , which provides financial assistance to HBAs involved in advocacy efforts on issues affecting the affordability of homeownership, NAHB distributed $298,000 to 18 HBAs in 14 states during 2023. Here are a few notable success stories:

• The HBA of Delaware worked to overcome potential mandatory fire sprinkler installation requirements in all new construction in New Castle County, Del., which would have added thousands of dollars to the cost of a home.

• NAHB helped the HBA of Greater Portland to defeat a ballot measure that would have established a countywide 0.75% capital gains tax to fund a tenant resource program designed to provide legal representation for tenants in eviction proceedings.

• The HBA of Greater Austin worked with the Austin City Council to pass new code amendments for the first phase of the “Home Options for Middle-Income Empowerment” Initiative. The approved code amendments are among a series of updates to the city’s Land Development Code, which governs land-use regulations in Austin, intending to provide more housing types and increase housing supply within single-family zoned areas of Austin.

BUILD-PAC

BUILD-PAC, NAHB’s political action committee , helps elect the most qualified pro -housing, probusiness candidates to Congress. By supporting Democratic and Republican candidates, BUILDPAC opens doors on Capitol Hill an d ensures housing remains a top priority in Washington.

As we look to the pivotal 2024 November elections, BUILD -PAC at the end of 2023 was more than halfway to its goal of raising $3.25 million for pro -housing candidates in this election cycle.

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