continued from p. 45

News

'A REALISTIC PICTURE'

Median home price rose 11.2% in year; land cost up 17%, NAHB survey shows

Home builders, who bemoan their lack of statistical data on housing, will be intrigued by this new NAHB survey. Since it covered only 100 builders, its results cannot be considered infallible. But it does point up the importance of a reliable study of housing and the mortgage market.

Home prices, rising steadily since World War 2, have jumped an amazing 11.2% in one year.

An NAHB survey of 100 top builders throughout the country shows that the median home has increased in price from $13,-050 in 1955 to $14,508 this year.

Number of homes being built under $15,-000 declined 30% while the volume of homes priced at $15,000 and over rose 71% (See chart).

This trend had been noted a year ago, but few builder-�or anyone else suspected that it had gone so far so fast. NAHB Economist Nat Rogg, who handled the survey, attributes the trend to two things: 1) the desire of buyers for larger and better equipped homes and 2) the rising cost of labor, materials and land.

Rogg calls land "the largest single factor."�

The survey showed that average lot cost is now _R0GG more than $2,600, an increase of 17% in one year. In 1950 a lot was 10% of sales price. In 1955 it was 15%. Now it is 18.4%. Other findings:

•� Builders' plans for 1956 showed that "smaller builder-� 1 to 100 units a year

plan to build more, not fewer, units this year. The biggest builders are cutting back all along the line.

•�    Reports of unsold homes are common, but the number reported in the survey is not considered alarming. Most of the unsold homes were less than 60 days old.

•�    Tight money is getting tighter construction money as well as mortgage money. Discounts are high, up to 8 points. Half of the builders said they were starting homes without firm commitments for mortgages. Of 50 who said they did not have take-outs, 20 said they were relying on warehousing.

•�    Credit rejections of buyers have increased, although one-third of the builders said they had had no rejections this year. (Rogg noted that he could not generalize since it was impossible to tell how well any one builder screened his applicants.)

•�    The trend toward secondary financing through second mortgages or contracts for deed is up, apparently because of the corresponding trend toward higher down payments.

•�    The extra 2% down payment requirement on VA and FHA sales is having little effect on sales of most builders. Builders reported they still have plenty of units left for sale on the easier terms prevailing before FHA and VA hiked down payments 2% last July. Where the rule is hurting, however, it is hurting badly.

•�    Though builders agreed that prices on everything have gone up, they reported no serious materials shortages. 85% of them reported profits per house down.

A gloomy picture? "I don't think so,"� Rogg said in a talk to NAHB directors at their continued on p. 55

Trend toward higher priced homes is shown in results of NAHB's survey of 100 leading builders. Their 1955 median home price was $13,050. This year it is $14,508 a gain of 11.2%. NAHB says 42% are moving to a higher price class this year, 11% to a lower class, 8% both ways (toward the center or the extremes) while 39% are staying in the same category. Replies showed a 30% drop from last year in units priced under $10,000 and a 40% decline in houses priced from $10,000 to $12,500.

PRESENT SALES MARKET

Compared with Changes year ago past month

Same .......... 29%    .    38%

Better .......... 13%    33%

Worse .......... 58%    29%

More than half the builders reported sales down this year, but one in seven said they were better than last year this time.

PLANS FOR 1956

Total ......

1-100 unit bldrs. ... Bigger bldrs.

Units built % change '55    '56    from

17,833    17,102     4.1%

2,226    2,907 +30.6%

15.607    14,195     9.1%

Builders plan to build only slightly fewer houses this year than in 1955, reflecting both the good competitive position of those queried and builder optimism.

CHANGES IN VOLUME '55 TO '56

ers plan to build more units this year than last. Most larger builders plan cutbacks.

COMPLETED, UNSOLD HOMES

Reporting builders

Only a quarter of the builders reported unsold homes completed more than 60 days. One-third had no unsold units at all.

i

FINANCING

compared with Changes year ago past month

Same ............. 24%    28%

Easier ............. 0    2%

Tighter ............ 76%    70%

Both construction money and permanent take-out money are tighter than a year ago.

COSTS AND PROFITS

There were few materials shortages reported but most builders found all costs up and their profits reduced.

^⅞ Percentages in the tables all refer to builders reporting in the survey.