The National Association of Home Builders (NAHB) released their estimate of single-family tear-down starts in 2016 on Monday, and calculated that the number has increased from 2015’s average of 7.7 percent to 10.6 percent.
A tear-down start is defined by a home that was built on land that was once previously the sight of another structure. The estimate operates under the assumption that builders would find evidence of a previous structure when they go to erect a new one. The NAHB uses the NAHB/Wells Fargo Housing Market Index (HMI) as a base and sends the survey to a panel of single-family builders located across the country to collect the information. The estimate is based on a weighted percentage to arrive at the total amount of single-family tear-down starts.
Of the single-family builders polled, 69 percent—the largest group—said that 0 percent of their starts were located on a site that had a previous structure on it, compared to 2015’s total of 51 percent. 10 percent polled said the number of single-family starts ranged between 1 percent and 10 percent; 12 percent said the starts for the year ranged between 11 percent and 30 percent. Only 2 percent said their starts were at a tear-down location between 31 percent and 60 percent of the time, as well as 61 percent to 99 percent of the time. Five percent of those polled said 100 percent of their single-family starts were located on land that was once home to another structure.
Based on the 10.2 percent weighted percentage, the NAHB estimates that an approximate total of 79,300 starts were at a tear-down site out of 781,000 total single-family starts reported by the U.S. Census Bureau.
Out of those 79,300 single-family starts, 33,400 were located in the west region—as divided and defined by the Census principle regions. The midwest was home to 12,300 tear-down starts; the south 23,800; and the northeast 9,800.
While these figures are only estimates, the NAHB reports that the increase in tear-down starts in indicative of the continued recovery of the single-family housing market.