Tag Archive | "housing market"

NAHB Projects 25-Point Drop in Interest Rates

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NAHB Projects 25-Point Drop in Interest Rates

Posted on 16 August 2019 by CRadmin2

At the end of July, the U.S. Federal Reserve cut its short-term funds rate by 25 basis points to a rate of 2.25 percent, according to a report from the National Association of Home Builders (NAHB). Although the housing market is facing affordability issues from prospective homebuyers, the new rate will undoubtedly help by decreasing the cost of home loans.

The Federal Reserve’s policy has evolved over the last three quarters, and this is the reason why interest rates have fallen since last year. The housing market experienced a 10-year low in affordability just last fall, but the new policy has extremely positive prospects for both housing demand and home construction, which should reflect in the countertop industry. In addition, the new maximum interest rate provides an offset to the rising costs of construction.

Rising costs have been reducing affordable inventory, especially for entry-level buyers, and production costs have been the number one factor in the decline of affordability. The NAHB has already predicted a flat market for new homes and starts in 2019, and ballooning costs are a primary factor.

Looking at the larger picture of the overall economy, the Federal Reserve has said that the labor market is strong and activity is increasing at a moderate rate, which echoes the perspective of home builders, which is that the overall economy is slowing, labor shortages are being experienced and there are concerns about housing affordability. The Fed also stated that fixed investment for businesses has been soft, and this has also reflected in the housing industries in recent quarters.

Inflation has slowed, according to the Federal Reserve, and is currently below the target rate of 2 percent. If this trend continues, it will be in a position to reduce rates even further to spur on the slowing economy. However, there is no guarantee that this will transpire. The NAHB says that some investors are acting too aggressively in anticipation of a 75-basis-point reduction in the coming quarters.

Although the 75 point reduction may not happen, the NAHB still forecasts another 25 point reduction by the end of 2019 because of slowing inflation and growth, but the soft patch of the late-cycle housing market at the end of 2018 shows that there are still “ongoing macro risks.” To note, residential fixed investment is still down for the last year and a half.

For further information on the housing market, take a look at the Eye on Housing blog post by NAHB Chief Economist Robert Dietz.

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Checking the Pulse of the Countertop Market

Posted on 24 September 2015 by cradmin

All countertop fabricators and industry professionals stand to benefit by keeping their fingers on the pulse of the market, and now that we are transitioning into the final quarter of the year, this is a great time to take a reading. A quick scan of the latest statistics and trend predictions shows nothing but growth in the industry. While this is quite a welcome situation for countertop professionals, it begs the question, “When does it end?” Fortunately, for now, we don’t see an end anytime soon, and the numbers all look very promising, especially when considering the positive outlook in our last housing-market report in June.

NBMDA Reports Increased Growth Confidence

Last month, the North American Building Material Distribution Association (NABMDA) released their Spring 2015 Quarterly Sales Trends Report, which provides insights, analyses and forecasts for the manufacturers and distributors of building materials. According to the latest findings, March and April were both very strong months, and 70 percent of industry professionals said that this was enough for them to plan on adding personnel sometime during the course of the year.

Building-material distributors experienced 10 percent growth in the month of March with a forecasted growth rate of 6 percent for boards and panels, flooring, hardware and storage for the rest of the year.

Housing Starts Highest Since 2007

The National Association of Home Builders (NAHB) reported in August that housing starts increased by 0.2 percent to a seasonally adjusted annual rate of 1.206 million homes, according to data from the U.S. Department of Housing and Urban Development (HUD). However, this was just enough to mark the highest level of housing starts since October 2007.

The recent increase in starts is primarily because of the high demand of single-family housing, which rose by 12.8 percent to a seasonally adjusted annual rate of 782,000 homes.

“Our builders are reporting more confidence in the market and are stepping up production of single-family homes as a result,” said Tom Woods, professional homebuilder and chair of the NAHB. “Continued job and economic growth will keep single-family housing moving forward.”

Looking at housing starts by region, the highest gains were in the Midwest at 20.1 percent and the South at 7.7 percent. However, starts decreased by 3.1 percent in the West and 27.5 percent in the Northeast.

NAHB/Wells Fargo HMI at 10-Year High

Last week, the NAHB reported that builder confidence in new single-family homes continued its long and steady increase, which pushed the NAHB/Wells Fargo Housing Market Index (HMI) up one point to 62, which is the highest it has been since October 2005.

“The HMI shows that single-family housing is making solid progress,” said Woods, noting that there have been some concerns about lot and worker availability.

“NAHB is projecting about 1.1 million total housing starts this year,” said David Crowe, chief economist of the NAHB. “Barring any unexpected jolts, we expect housing to keep moving forward at a steady, modest rate through the end of the year.”

The HMI is based on a monthly survey the NAHB has been issuing for the last 30 years. The survey asks builders to gauge the current state of single-family home sales and the expected state for the next six months. In addition, the survey asks builders to rate the quantity of prospective buyers on a five-point scale from very low to very high.

In the September survey, two of three components used to calculate the HMI showed increases: Prospect traffic rose two points to 47 and current sales rose one point to 67. However, sales expectations for the next six months dropped two points to 68.

Looking at the regional HMI scores for September, the West and the South each rose by one point to 64, and the Midwest increased one point to 59. The Northeast, however, dropped by one point to 46.

National Remodeling Forecast Launched

Just last week, Qualified Remodeler reported that a new remodeling forecast was launched by John Burns Real Estate Consulting in Irvine, Calif. The company is considered a major analytics firm for the residential construction market, and its first official forecast predicts that residential remodeling will grow by 7.8 percent in 2016 to $300 billion.

The survey also breaks down last year’s remodeling statistics. In 2014, the remodeling market totaled $266 billion. Of that, $113.6 billion was for large projects (more than $5,000) while $146.1 billion was for small projects, and $5.9 billion went to disaster repair. In addition, $108 billion was spent on building materials by professional contractors while do-it-yourself (DIY) homeowners spent only $69.3 billion. Contractors also brought in $88.2 billion for labor and other services.

The new forecast, dubbed Burns Residential Repair and Remodel Spending, is being called the “first true forecast of remodeling activity” in the United States. The closest we have had to it is the Leading Indicator of Remodeling Activity (LIRA) from Harvard University’s Joint Center for Housing Studies’ Remodeling Futures Program and remodeler sentiment as tracked by the NAHB.

The John Burns forecast relies heavily on intensive data gathering from several sources, including the biennial American Housing Survey and a proprietary model using data from property-management agencies, rental-home investment firms and apartment-building owner surveys and in-house pricing surveys.

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