Townhouse Construction Stays at Record High
Townhouse construction remained elevated in the Q2 2024, as demand for medium-density housing continues to be solid despite slowing for other sectors of the housing industry.
According to analysis by National Association of Home Builders (NAHB) of U.S. Census data, 42,000 townhouses were started last quarter, an 8% increase over Q2 2023. Over the past four quarters, 174,000 townhomes were started, up 23% from the previous four quarters.
Townhouses made up almost 15% of single-family home starts in Q2 2024. But using a one-year moving average, the share of townhouses jumps to 17.2% in Q2 2024 for the second-straight quarter, an all-time high in the data series dating back to 1985.
Prior to the current cycle, the peak market share of townhouse construction was set during the first quarter of 2008, when the share reached 14.6% on a one-year moving average basis. Townhome construction had enjoyed steady growth in both real terms and in share from the early 1990s up until the housing crash of 2008.
“This is a form of housing construction that will continue to gain strength, as more first-time home buyers enter the market and as generational preferences shift to more walkable, medium-density locations,” wrote NAHB Chief Economist Dr. Robert Dietz more than a decade ago in a guest piece for U.S. News & World Report.
Drive to Decarbonization in the Construction Industry
The construction industry plays a major role in global climate change, accounting for nearly 40% of yearly carbon emissions. These emissions stem from both embodied and operational sources. The most familiar source is the carbon emissions generated from the operation and use of a building throughout its lifespan.
Embodied carbon, however, refers to CO2 emissions produced during the manufacturing, transporting, and installing of building materials—the carbon footprint of a construction project before it becomes operational. Reducing embodied carbon during the manufacturing and early construction stages of a project is crucial for mitigating its overall impact.
In the past few months, the U.S. federal government has ramped up efforts to promote decarbonization in construction through various zero-carbon initiatives and climate standards, such as the Investing in America Agenda, the national definition of zero emissions buildings, and new emission standards to eliminate onsite fossil fuel usage in federal buildings by 2030.
One Click LCA, a leading provider of construction life-cycle assessment (LCA) software partnership with the U.S. Green Building Council (USGBC) will offer educational opportunities, and increasing outreach efforts to promote decarbonization across the construction industry in the United States.
This strategic partnership will enable USGBC members to leverage these federal programs by offering educational resources and discounted access to life-cycle assessment software tools.
The benefits of the partnership include:
A joint commitment to sustainability—This partnership underscores the commitment of both One Click LCA and USGBC to advancing sustainability in the built environment. By making life-cycle assessment tools more accessible, USGBC and One Click LCA aim to foster greater industry engagement and drive meaningful progress toward decarbonization.
Discounted software access for USGBC members—Through this partnership, USGBC members will receive exclusive discounts on One Click LCA software. This initiative is designed to make life-cycle assessment tools more accessible, enabling members to integrate sustainable practices into their projects more effectively.
Enhanced educational opportunities for USGBC members—The partnership will focus on creating comprehensive educational programs. These initiatives will equip USGBC members with the knowledge and skills necessary to implement life-cycle assessments and sustainable practices in their projects. The educational opportunities will include webinars, workshops, and training sessions led by experts in the field. One Click LCA offers hours of on-demand courses and live bootcamps that provide professionals with in-depth knowledge of life-cycle assessment practices and a deep understanding of how to leverage the software to significantly reduce their carbon footprint.
Promoting decarbonization through outreach—One Click LCA and USGBC will work together to enhance outreach efforts within the construction industry. By leveraging their combined networks and resources, they plan to raise awareness about the importance of decarbonization and the role of life-cycle assessment in achieving this goal. The partnership will also promote the sharing of best practices and success stories to inspire others in the industry to take similar actions.
Preconstruction May Ease Cost and Supply Chain Challenges
Brett Poulos, the national director of preconstruction and estimating at Burns and McDonnell, a construction company based in Kansas City, Missouri, emphasized the critical role of an effective preconstruction process.
According to an analysis by the Associated Builders and Contractors of U.S. Bureau of Labor Statistics data, construction input prices rose again in July, driven largely by increases in petroleum and natural gas prices. Although these costs have started to stabilize over the past year, they remain nearly 40% higher than in February 2020.
As construction projects grapple with rising costs and procurement challenges, the importance of the preconstruction phase in mitigating these issues is becoming increasingly evident. This phase provides owners and developers with a clearer understanding of the project’s cost, scope and schedule.
Poulos explains that preconstruction encompasses a wide range of activities. They define it as the comprehensive front-end process that includes safety analysis, constructability, lead time and schedule analysis, target-value design and estimating.
For engineering, procurement and construction (EPC), design-build, or collaborative delivery projects, the preconstruction process differs significantly from design-bid-build. The extent of preconstruction integration and involvement varies based on the project delivery method and the capabilities of the preconstruction team.
He further shares that his experience shows that projects are more successful for both the prime contractor and the client when preconstruction teams are involved from the earliest stages of project inception. This early engagement allows for a clearer vision of the project and facilitates data-driven decision-making over a longer timeline.
Cybersecurity Requirements for Defense Contractors
On August 15, the Department of Defense (DOD) published a second proposed rule for the Cybersecurity Maturity Model Certification (CMMC) program that places unified cybersecurity and information security requirements on DOD contractors and subcontractors. As the Association General Contractors (AGC) previously reported, the first proposed rule issued in December 2023 focused on the CMMC program and corresponding cybersecurity requirements for DOD prime and subcontractors. This latest proposed rule supplements the first proposed rule. Importantly, it contains DFARS revisions for contract clause requirements and additional guidance to federal contracting officers.
The DOD proposes to implement the CMMC requirements over four phases, starting with the inclusion of CMMC Level 1 and Level 2 Self-Assessment requirements in all applicable DOD solicitations. This will begin on the effective date of the final rule and will be a condition of contract award. CMMC Level 3 is expected roughly six months to a year after implementation of the final rule. The full rollout, which will see CMMC program requirements included in all applicable solicitations and contracts, is expected to occur sometime in 2027.
AGC has long communicated the difficulty many contractors and their subcontractors have had implementing these cybersecurity requirements and the challenges of that the CMMC model brings. AGC of America has previously filed comments on CMMC as it was developed and will file comments on the new proposed rule.
Surprise Lift for New Home Sales in July
Sales of new homes rose unexpectedly in July, following significant revisions in the previous months’ data.
Sales of newly built, single-family homes in July rose 10.6% to a 739,000 seasonally adjusted annual rate from significant upward revisions in June, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in July is up 5.6% from a year earlier. After the notably higher revisions for the May and June data, new home sales from January through July of 2024 are up 2.6% in 2024 compared to the same period in 2023.
“Despite the monthly bump in new home sales data, higher rates continue to sideline buyers as housing affordability challenges remain,” said Carl Harris, chair of the National Association of Home Builders (NAHB) and a custom home builder from Wichita, Kansas. “The only sustainable way to ease high housing costs is to implement policies that allow builders to construct more attainable, affordable housing.”
“While mortgage rates moved lower in July, the Census estimated gains for new home sales do not match recent industry survey data including the NAHB/Wells Fargo Housing Market Index which showed weakness in the current sales index,” said NAHB Chief Economist Robert Dietz. “The Census estimate of new home sales is often volatile and subject to revisions and it is possible that the July estimate for sales will be revised lower next month. NAHB is forecasting gradual improvements for the home building sector as the Fed eases monetary policy and mortgage interest rates trend lower.”
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 July reading of 739,000 units is the number of homes that would sell if this pace continued for the next 12 months.
New single-family home inventory in July ticked lower to a level of 462,000, down 1.1% from the previous month. This represents a 7.5 months’ supply at the current building pace. While this reduced level of months’ supply is above the commonly used balance measure of 6, the measure of total home inventory is lower. Given a lean level of resale inventory, total home inventory (new and existing) is near 4.5, which remains low.
The median new home price was $429,800, up 3.1% compared to last month, and a 1.4% decrease from this time last year.
Regionally, on a year-to-date basis, new home sales are up 5.4% in the Northeast, 22.1% in the Midwest and 6.1% in the West. New home sales are down 2.4% in the South.
SFIA Appoints Lee Zaretzky to Board
The Steel Framing Industry Association (SFIA) announced that Lee Zaretzky, president of Ronsco, Inc., New York, New York, has been appointed to serve on its board of directors, representing the contractor members of the association.
Zaretzky is a wall and ceiling industry veteran with broad leadership experience. Besides heading Ronsco, Zaretzky is vice president of the Association of Wall Ceiling and Carpentry Industries of New York, Inc. (WC&C), a position he has held for more than 18 years. He is vice chair and an executive committee member at the Building Trades Employers’ Association (BTEA), where his continuous service exceeds 14 years.
Zaretzky also serves as secretary/treasurer of the Foundation of the Wall and Ceiling Industry (FWCI), a post he has held since 2014. Zaretzky is a past director of the Association of the Wall and Ceiling Industry (AWCI), where he served from 2009 to 2021.
“We are thrilled to welcome Lee to our leadership team, bringing with him an impressive skill set and progressive ideas,” says Don Allen, SFIA executive director. “His arrival is perfectly timed as we prepare to launch the revamped SFIA Contractor Certification Program. Ronsco was the first contractor to achieve SFIA certification in cold-formed steel (CFS) framing, a testament to Lee’s commitment to quality.”
Zaretzky’s term as SFIA director, which began in June 2024, will run through the remainder of the year. Thereafter, he is expected to be nominated by ballot and confirmed to serve as director for additional years of service.
The SFIA’s leadership team includes three officers and nine directors, who together serve on one of the construction industry’s most diverse boards of directors. The directors represent different categories of the SFIA’s broad membership base, which includes small, medium and large steel framing product manufacturers, suppliers, steel mills, designers, contractors and more.
SFIA Technical Guide
The Steel Framing Industry Association’s (SFIA) “Technical Guide for Cold‐Formed Steel Framing Products,” provides members with a comprehensive tool for designing with cold‐formed steel framing.
Included are tables for Section Properties, allowable Limiting Wall Heights (composite, non-composite and curtain wall), Combined Axial and Lateral Loads, Floor and Roof Joist Spans, Header Loads, Web Crippling Loads and Channel Properties. In addition, the Technical Guide provides notes for fasteners (screws and welds), typical details, a guide to additional technical resources, as well as a useful explanation on reading fire rated assemblies.
The SFIA Product Technical Guide meets the requirements of the 2021 International Building Code (IBC), the 2022 California Building Code (CBC) and the 2020 Florida Building Code (FBC).
Learn more at www.steelframing.org/sfia-technical-publications.
