NAHB Podcast: Connecting the Dots - April Sales, Affordability and Asserting NAHB's Position on Capitol Hill
On the latest episode of NAHB’s podcast, Housing Developments, CEO Jim Tobin and COO Paul Lopez discuss the latest economic data and NAHB’s advocacy efforts on Capitol Hill.
It was no surprise this week that new sales numbers for April were down, dropping 4.7% to a seasonally adjusted annual rate of 634,000 units.
“We’ve been seeing this story for a year now,” Tobin noted. “We were obviously optimistic in the first quarter of the year, where rates really seemed to bounce back. But as our listeners know, mortgage rates are still hovering right around 7%, the Fed is struggling. They’ve kind of plateaued on their fight against inflation.”
The only positive seems to be that existing home supply has remained low, and builders have stayed busy trying to close that gap. But that’s not enough to solve the housing affordability crisis, which NAHB is tracking through its newest index — the NAHB/Wells Fargo Cost of Housing Index — that launched this week.
“Not surprising — and this is what we’ve been preaching for several years now — housing affordability is not great,” Lopez explained. “Basically what it reported is that 38% of a typical family’s income now is needed to pay the mortgage and buy that median-priced single-family home.”
For housing to be considered affordable, it should be 25% of income — or 33% on the high end. For lower-income households, that median was closer 77% of income toward the cost of housing. This is true for the rental market as well, where households paying more than 30% of their income toward housing are considered rent burdened. Based on the latest Census numbers, more than 22 million Americans are rent burdened, and more than 12 million renters are paying more than 50% of their income to rent.
To solve this crisis, Congress and the Biden administration need to do more. NAHB member Shawn Woods — a builder and developer from Blue Springs, Mo., in the Kansas City area — testified before the House Subcommittee on Energy, Climate and Grid Security about how energy policies are burdening housing attainability and affordability. Kansas City chose to adopt the 2021 IECC energy code a year ago to access Inflation Reduction Act funds, but ended up crushing housing production in the process.
“Shawn testified the surrounding counties around Kansas City that aren’t on the 2021 code — they’re permitting is up 120-something percent,” Tobin shared. “In Kansas City proper, they’re only up 22%. You can see the disparity, and Shawn will tell you, in his area, it’s going to add $30,000 to the cost of a new home in Kansas City to build to the 2021 code.”
NAHB will take these and other issues to Capitol Hill on June 12 during the 2024 Legislative Conference, taking place during the Spring Leadership Meeting in Washington, D.C.
Listen the full episode below and subscribe to Housing Development through your favorite podcast provider or watch all the episodes on YouTube.
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