In the June 2024 edition of At A Glance, the Housing Finance Policy Center’s reference guide for mortgage and housing data, total new completions, including MH shipments have increased 17 percent, existing inventory has expanded from 2.9 months to 3.6 months over the last year and mortgage rates remain elevated. This month’s chartbook features an analysis of the 2023 Survey of Construction.
Findings from the 2023 Survey of Construction
Overall Trends in Single-Family Construction (Page 38)
Single-family starts declined by 7.1 percent, from 1.02 million in 2022 to 947,000 in 2023. This is the second consecutive year that single-family starts have declined. In 2023, there were 646,000 new home sales, modestly higher than the 627,000 new home sales in 2022, but 20 percent below its level in 2020. Both single-family starts and new home sales remain below their pre-pandemic 2019 levels. Amid less new supply, the median price of a new home sold rose from $322,000 to $428,500 between 2019 and 2023.
Modular and Panelized Construction (Page 39)
The number of modular homes for sale has declined by 67.7 percent since the early 2000s, down from a peak of 40,269 in 2003 to just 13,003 units in 2023. Over this same period, its share of single-family completions fell from 5.4 percent to 2.7 percent. The modular share of new construction is low across the nation but is highest in the Northeast at 5.8 percent and smallest in the West at 1.7 percent. In each year between 2019 and 2023 construction of modular or panelized homes, on average, was faster than the average number of months from permit authorization to completion of site-built homes. In addition, the gap in median sale price for modular and panelized construction and stick-built construction has narrowed since 2020.
Financing of New Home Sales (Page 40)
The conventional share of new home sales rose from 67.1 percent in 2019 to 75.3 percent in 2022 before declining modestly in 2023 to 72.5 percent. The decline in the conventional share, as well as the share of new homes purchased with all cash, was offset by an increase in the share purchased using an FHA loan. FHA financing tends to be more prevalent on lower-valued new homes and on modular panelized homes while conventional financing is concentrated among higher valued home sales and stick-built homes. Conventional financing is also concentrated among condos. This may reflect restrictions FHA may place on condo projects.
Affordability of New Construction (Page 41)
Affordable homes (defined in this feature as homes less than $300,000) make up a drastically smaller share of the new home market. Without adjusting for inflation, the share of starter homes declined from 85.5 percent of new homes in 2000 to 14.4 percent in 2023. Over this same period, the share of new homes above $600,000 has increased from 1.3 percent to 23.1 percent in 2023. Not only are a larger share of new home sales priced above $300,000, but the ratio of the permit value compared to the sale price is declining. The permit value includes the total value of work, including materials and labor, for which the permit is being issued. In addition, a growing share of new homes sales are also in a homeowners’ association which means the homebuyer pays a homeowners association fee, in addition to the principal, interest, taxes and insurance that many buyers of new homes also owe.
