NBN Online for the week of June 26, 2006

New Home Size Reaches All-Time High in 2005

The average size of a new home climbed to a record high last year, according to annual data on new-home characteristics released by the U.S. Census Bureau last month, and in terms of amenities the distance between homes built today and homes built 30 years ago continued to widen.

“Between 1975 and 2005, the portion of new homes built with central air conditioning has risen 43%, while the portion of homes built with fewer than two bathrooms has fallen from 41% to just 4%,” noted Jerry Howard, executive vice president and CEO of NAHB. “Meanwhile, the share of newly built homes with four or more bedrooms has risen steadily from 21% three decades ago to just shy of 40% last year.”

The statistics, along with NAHB research on several additional trends, provide a snapshot of changing aspects of home design over the past 30 years, including the continued expansion of new-home size through 2005.

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Lumber Prices Provided by Random Lengths

Big Builders Improve Operations and Reap Big Profits

While they credit market fundamentals, land assembly strategies and customer satisfaction for their unmatched financial performance in recent years, the nation’s big home builders have been steadily implementing innovative operating practices that have worked to their advantage by increasing their home building efficiencies, according to a new study by the Joint Center for Housing Studies of Harvard University.

Between 1999 and 2004, companies building 500 units or more realized inflation-adjusted revenue growth of 135%, according to “The Evolving Home Building Industry – Implications for Consumers.” In addition, they increased their gross margins on homes sold and net income by about 4.5 percentage points each. Gross margins rose from 19.6% to 24.0% and net income grew from 8.0% to 12.6%.

Impact Fees Illegal, Says Mississippi State Supreme Court

In a decision that likely will rebound on other Mississippi jurisdictions, the city of Ocean Springs’ impact fee ordinance is an illegal tax, the Supreme Court of Mississippi has ruled.

The high court last week affirmed the 2004 state circuit court decision in the impact fee lawsuit filed by the Home Builders Association of Mississippi against Ocean Springs. The Mississippi Supreme Court’s decision should concern cities that charge impact fees without specific authority from the state.

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