The dramatic election victory for President-Elect Donald Trump and congressional Republicans reshapes the outlook for the housing sector and the overall economy. For example, equity/stock markets loved the result, expecting an improved regulatory environment and significant — if not, total — extension of the 2017 tax reform policies.

However, the bond market has deep concerns, with investors dumping bonds and pushing the 10-year Treasury rate from 3.6% in mid-September to near 4.3% at the end of last week. Bond investors are concerned about possible inflationary impacts from a larger federal government deficit and a move to tariffs.

And while the incoming Trump administration has been clear that deportation will be used to deal with illegal immigration, the scope and scale of this policy is unclear. It remains a significant wildcard for the economic outlook, with potential impacts on housing demand, labor supply and border issues. Greater clarity on all of these policy issues will be gained as Trump names key officials to staff his new administration in the coming weeks.
In the meantime, the rise in long-term interest rates has had a direct impact on the mortgage market. Counter to most forecasts, including NAHB’s, the average interest rate for a 30-year mortgage has increased from below 6.1% in mid-September to almost 6.8% last week. While this represents a significant hit to housing affordability, macro conditions remain solid. U.S. GDP expanded at a 2.8% annualized growth rate in the third quarter, albeit lower than the 3% rate from the second quarter.

The labor market is showing signs of strain. After some of the most significant job market data revisions in more than a decade, October job growth totaled a meager 12,000 in part because of major hurricanes and labor strikes. The unemployment rate was steady, at a low 4.1% reading. Home builders and remodelers lost 5,300 jobs in October as residential construction activity slowed, particularly in the apartment development sector. Over the last year, residential construction has added just 44,500 jobs. The total number of open, unfilled construction jobs declined to just 288,000 in September — another sign of weakening demand for construction labor.

We will get a reading of single-family builder confidence in just under a week, which will help get a sense of how builders are viewing market conditions over the next six months. Apartment developers continue to report mixed sentiment regarding the market. The latest NAHB Multifamily Production Index decreased four points from the previous quarter to a weak reading of 40, indicating more apartment builders are facing poor market conditions. However, the third quarter reading was two points higher than a year ago, suggesting the multifamily construction market could potentially stabilize later in 2025.

But the multifamily outlook, along with other housing and economic indicators, contains more uncertainty until the election results are finalized and what policies Trump intends to pursue at the start of his second administration.

Farewell but not Goodbye

EPAB President’s Message

Jaime Gonzalez, President
El Paso Association of Builders

As the year draws to a close, so does my time as President of the El Paso Association of Builders. It has been an honor and a privilege to serve this incredible community of builders, developers, and industry professionals. Together, we’ve navigated a year of challenges, changes, and opportunities, all while strengthening the foundation of our association and our industry.

This year, we faced a plethora of economic hurdles marked by challenging interest rates, political instability, increased labor and land costs, all of which directly impacted our work and the affordability of the homes we build. With these challenges, we’ve had to adapt and innovate to maintain stability and growth.

Our discussions have ranged from the value of teamwork and the steadying effect of reliable workflow to the necessity of staying informed in a world overflowing with information. We’ve talked about making hard choices, and about the importance of getting involved to advocate for our industry’s needs or as citizens in our communities. Through all of this, one thing remains clear: our success as builders depends not only on the homes we create but also on the relationships we build with our teams, our clients, and our community.

As I step down from this role, I am very grateful for all of you. The teamwork, dedication and effort of everyone in this association remind me why our industry is so important to the growth and prosperity of our community. While this is my farewell as your President, it is by no means goodbye. I will continue to work alongside you as we face the future together, I’ll always be part of this incredible group of builders, ready to meet the challenges of tomorrow.

To the incoming leadership, I offer my full support and encouragement. Our work is never done, but with the talent and dedication of this association, I am confident we are set up for continued success.

Thank you for allowing me the privilege to serve. Let’s keep building our homes, our businesses, and our community with the same strength and determination that has carried us through this year.

I leave you with the same phrase I shared with you in my first message to you: Life is great! If you don’t believe me, consider the alternative.

Executive Message

Shopping these days: WTF - What the FEE?

By Ray Adauto
Executive Vice President, EPAB

Fees are everywhere. Today just going out to eat carries with it costs above and beyond the price of the food and tip. So I looked back on some of the charges eateries, bars, and hotels have charged me. It won’t surprise you that a few fees, like those for paying with credit card, are now a normal practice. I use a debit card almost exclusively for most of my transactions, not a credit card. I wondered why I am forced to pay a service fee when it is not a credit card. Here’s what I found about some “hidden fees” we all should know, and businesses won’t tell you.

Major card issuers, including Visa and Mastercard, expressly forbid surcharging debit card transactions. The legality of surcharges is further influenced by state laws. For example, Texas law specifically bans debit card surcharging altogether.

Q. What is a debit card? A debit card is a payment card that allows cardholders to make transactions by drawing on funds they have deposited at a bank. It is linked to the cardholder’s bank account, and when a purchase is made, the money is immediately transferred from that account to the merchant’s account.

Q: Are debit card surcharges legal? No, surcharging for debit card transactions is prohibited under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This applies to all types of debit cards, including prepaid cards.

Q: How much are debit card processing fees? The average interchange fee for debit card transactions is about 2.2%. However, interchange fees can vary depending on the type of card, the card network, and the merchant’s category.

Q: How can merchants lower debit card processing fees? While you can’t technically lower the fees set by card networks and banks (i.e., interchange and assessment fees), there are steps you can take to offset the costs of accepting debit cards. A common method is to implement cash discounts, where shoppers pay a lower price when they pay by cash.

Q: Why isn’t debit card surcharging legal? The Durbin Amendment was enacted in 2010 to protect consumers from hidden fees. The amendment capped the interchange fees that merchants can charge for debit card transactions. As a result, merchants are not allowed to pass on these fees to consumers in the form of surcharges.

Even in our business we have tried to stay away from charging card fees. It is becoming difficult with all the fees associated with the cards. What we might see in the future depends on factors beyond our control, so never say never. We’ll follow the rules.

Source: https://staxpayments.com/blog/are-debit-card-surcharges-legal/

Higher Mortgage Interest Rates Slow Housing

Housing starts edged lower last month as average monthly mortgage rates increased a quarter-point from 6.18% to 6.43% between September and October, according to Freddie Mac.

Overall housing starts decreased 3.1% in October to a seasonally adjusted annual rate of 1.31 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The October reading of 1.31 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts decreased 6.9% to a 970,000 seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 9.3%. The volatile multifamily sector, which includes apartment buildings and condos, increased 9.6% to an annualized 341,000 pace but are down 29.3% on a year-to-date basis.

“Although housing starts declined in October, builder sentiment improved for a third straight month in November as builders anticipate an improved regulatory environment in 2025 that will allow the industry to increase housing supply,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and custom home builder from Wichita, Kan.

“While multifamily starts were up in October, the number of apartments under construction is down to 821,000, the lowest count since March 2022,” said NAHB Chief Economist Robert Dietz. “Further interest rate cuts from the Federal Reserve through 2025 should result in lower interest rates for construction and development loans, helping to lead to a stabilization for apartment construction and expansion for single-family home building.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 10.4% higher in the Northeast, 1.7% lower in the Midwest, 5.0% lower in the South due to hurricane effects, and 4.4% lower in the West.

Overall permits decreased 0.6% to a 1.42 million unit annualized rate in October. Single-family permits increased 0.5% to a 968,000 unit rate and are up 9.4% on a year-to-date basis. Multifamily permits decreased 3.0% to an annualized 448,000 pace.

Looking at regional data on a year-to-date basis, permits are 0.9% higher in the Northeast, 3.9% higher in the Midwest, 2.4% lower in the South and 4.8% lower in the West.

Multifamily completions are elevated as the apartment construction slowdown continues. In October, there were 1.8 apartments that completed construction for every one apartment that started construction.