Local housing analysts knew something was extraordinary about 2020 — in a good way — when they saw the response to July's Parade of Homes, the year's signature event for area home builders.
Feedback from sellers indicated that more than 100 homes were sold during the nine-day showcase, said Jeffrey Smith, CEO of the Home Builders Association of Greater Tulsa.
"It's kind of unheard of, people making decisions that quickly," Smith said. "It's almost like a firestorm with people thinking I have to get out there, and I have to buy because I don't know if the house is going to be there in two weeks."
Mike Fornier, president of the HBA and owner of Sonrise Construction, called it one of the best Parades in 15 years.
"The very first weekend, this was blowing everybody away," he said.
While the COVID-19 pandemic is forcing folks to stay close to home, many are itching to build or move into a new one.
Across the country, purchases of existing residences are up 8.7% from a year ago, according to the National Association of Realtors, and people are capitalizing on near record-low mortgage rates to find affordable homes.
"With mortgages now 3% — I've even heard a few people getting in the upper 2s — your value on building or purchasing a home right now is off the charts," Smith said. "There is a lot of money that has been put into the economy from the government in the last five months.
"For those individuals who were able to keep their job, who did receive stimulus money, they possibly received a tax return on top of that. They are not able to spend money traveling around the world or into the Caribbean or different places. They weren't able to go the to movie theaters for four months. They weren't able to do a lot of those things that typically people are spending money on. They were sitting in their home looking at their house thinking, 'Gosh, wouldn't it be nice if I remodeled or renovated this and why don't we just sell this and buy or build a new house?'"
Area housing starts for July jumped 82.8% over the same period a year ago and were the best total for the month in 15 years, records from a local permit tracking service show.
July's figure was 448, up from 245 in 2019, according to Tulsa-based New Orders Weekly. For the year, housing starts have risen 24%, going from 1,729 to 2,143 in 2020.
"The sharp rebound in builder confidence over the summer really has led nationwide in the South and Midwest to spread out toward the East and the West," Fournier said. "It's usually just the opposite. This building boom is unlike anything that we've had in such a long time."
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose six points from the previous month to 78 in August, marking the highest reading since December 1998.
"The focus on the importance of housing has really stoked buy traffic to highs that I have never seen before in my 20 years in the business," Fournier.
Tempering the surge has been the steep cost of lumber.
According to new data from the National Association of Home Builders, Lumber prices have risen to average more than $600 per thousand board feet, representing a nearly 80% increase since April, according to data from the NAHB.
The recent jumps in lumber prices figure to add thousands of dollars to the cost of a standard new home, the NAHB says.
"What the pandemic did create in lumber was that everybody went out to Lowe's and Home Depot and bought all the lumber so they could do their stay-at-home projects," Smith said. "Of course, the lumber mills across the country shut down in the middle of March because they were worried about what could happen. By the time they realized that everyone was buying lumber and materials, they were having a hard time keeping up with the demand across the nation."
For the housing market to remain robust, it will need a drop in lumber prices and a jump in skilled artisans, Fournier said.
"As far as keeping the momentum, my personal opinion is as long as we have interest rates that stay in that 3% to 4% range and we don't have any more government regulations put on the backs of the housing market, the momentum is going to continue to be strong," he said. "It will be a bright spot not only in Oklahoma but in the country."
Rhett Morgan 918-581-8395