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ECMD
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A business dedicated to delivering quality products for your home construction.
A business dedicated to delivering quality products for your home construction.

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LAS VEGAS – At the 75th edition of the International Builder’s Show, National Association of Home Builders (NAHB) Chief Economist David Dietz said he expects the industry to see moderate growth in 2019.

Dietz, along with a panel of economic experts who provided their economic outlooks for 2019 at the Las Vega Convention Center, also suggested that there is no major threat of a recession on the near horizon.

The NAHB is projecting 1.26 million total housing starts for 2018, and it expects overall production to inch up 0.8% in 2019 to 1.27 million units.

Single-family starts are expected to hit 876,000 units in 2018, and rise an additional 2% to 894,000 this year.

“Ongoing job creation and solid household formations will keep demand firm, but builders will continue to grapple with supply-side headwinds that will dampen more vigorous growth in the single-family sector,” Dietz said.

Hurdles include a short supply of construction workers; a shortage of buildable lots; regulations; tariffs on lumber and building materials; and a slow growth in acquisition, development and construction loan activity that is failing to keep pace with demand.

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Affordability: the elephant in the room when it comes to home sales.

While affordability remains public enemy number one for the housing industry and potential buyers, there was a bit of a silver lining in the grand housing scheme.

Increases in interest rates were offset by a decline in home prices in the fourth quarter of 2018, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HMI). The net result is affordability remained level in the fourth quarter but still sits at a 10-year low.

About 56.6% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $71,900, the NAHB reported. This marks a very slight rise from the 56.4% of homes sold in the third quarter that were affordable to median-income earners.

The national median home price dropped nearly 2% from $268,000 in the third quarter of 2018 to $263,000 in the fourth quarter. But the average mortgage rates rose by 17 basis points in the fourth quarter to 4.89% from 4.72% in the third quarter. This is the fourth straight quarterly rate hike and the highest rate level since the second quarter of 2011.

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Sales of newly built, single-family homes rose to a seasonally adjusted annual rate of 657,000 units in November after an upwardly revised October report, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

This marks a 17% increase from October’s sales pace. The sales report for November was delayed due to the recent partial government shutdown.

This is the highest sales pace since March 2018. However, on a year-to-date basis, sales are down 7.7 percent from this time in 2017. “The sales increase was fueled by a notable uptick in homes sold at the affordable end of the market,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La. “There is clearly a demand for new home homes even as builders continue to grapple with supply-side challenges, including shortages of lots and labor and higher building material costs stemming from tariffs.”

In addition to adjusting for seasonal effects, the November reading of 657,000 units is the number of homes that would sell if this pace continued for the next 12 months.

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Pending home sales declined in December with all four major regions experienced a decline compared to one year ago, the National Association of Realtors (NAR) reported.

The Pending Home Sales Index (PHSI) fell 2.2% to 99 in December from 101.2 in November while year-over-year contract signings fell 9.8%, marking the 12th-straight month of annual decreases.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

“The stock market correction hurt consumer confidence, record high home prices cut into affordability and mortgage rates were higher in October and November for consumers signing contracts in December,” said Lawrence Yun, NAR chief economist.

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Lowe’s Canada has opened a new, updated store model in Manitoba.

Located in Winnipeg, the format is a converted former RONA Home and Garden format that has been refined by “taking the best” of Lowe’s and RONA, the retailer said. The opening marks Lowe’s Canada’s 67th store to operate under the Lowe’s banner.

“Now more than ever, we are committed to the Lowe’s banner, and we are excited to bring Lowe’s unique customer experience and product selection to even more DIYers and home improvement enthusiasts in the Winnipeg area,” said Guy Beaumier, executive vice president of stores for Lowe’s Canada. “Each day, we strive to deliver the best service and value to our customers across every channel, including our industry-leading e-commerce solutions, making it easier for Canadians to tackle all their renovation projects, big or small.”

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Following two consecutive months of increases, existing-home sales fell 6.4% in December.

According to the National Association of Realtors (NAR), completed transactions that include single-family homes, townhomes, condominiums and co-ops declined to a seasonally adjusted rate of 4.99 million in December. Sales are now down 10.3% from a year ago and the rate of 5.56 million in December 2017.

Single-family existing-home sales sit at a seasonally adjusted annual rate of 4.45 million in December, down from 4.71 million in November, but is 10.1% below the 4.95 million sales pace from a year ago. The median existing single-family home price was $255,200 in December, up 2.9% from December 2017.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 540,000 units in December, down 12.9% from last month and down 11.5% from a year ago. The median existing condo price was $240,600 in December, which is up 2.3% from a year ago.

Higher interest rates have been given credit as a primary culprit behind the falloff.

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With the partial shutdown of the federal government now in its fourth week, and setting a new record, new residential construction starts have not been published since Dec. 18.

That’s when the report for November 2018 was published. The December report was scheduled for Jan. 17 but the U.S. Census Bureau remains on hiatus due to a lack of federal funding.

The shutdown also prevented the publishing of the Dec. 27, 2018 report spotlighting new residential sales for last November.

On Jan. 16, in conjunction with releasing the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) featuring the latest builder confidence level, the NAHB provided estimates for single-family starts.

The NAHB said that December Census data would show that single-family starts ended the year totaling 876,000 units, marking a 3% gain over the 2017 total of 848,900.

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A decline in mortgage rates is receiving credit for an uptick in builder confidence.

The National Association of Home Builders reported that builder confidence in the market for newly-built single-family homes rose 2 points to 58 in January on the NAHB/Wells Fargo Housing Market Index (HMI).

“The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months.”

Last month, builder confidence fell 4 points to 56 with housing affordability being blamed.

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Georgia‐Pacific has officially fired up production at its newest lumber facility in Talladega, Ala.

The $100‐million, 300,000‐square‐foot, technologically-advanced plant took 9 months to complete and has more than 130 full-time employees.

The Talladega plant is the first of three new lumber production facilities Georgia‐Pacific will be opening in the Southeast by the end of 2019.

While the Talladega facility began operating this past November, the company recently celebrated the start‐up with a dedication on the facility’s grounds with state and community leaders including Alabama Governor Kay Ivey, Georgia-Pacific President and CEO Christian Fischer, and City of Talladega Mayor Jerry Cooper.

“This investment in Talladega, and across Alabama, drives home our focus on providing long-term value to our customers, communities, employees and company,” said Fischer. “I’m proud of the many talented employees working at this site.”

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A $1,000 increase in the cost of a median-priced newly-built home pushes 127,560 prospective buyers out of the market, according to a recent study by the National Association of Home Builders (NAHB).

Based on incomes, theses households would no longer be able to qualify for a mortgage after a $1,000 increase. The levels of buyers out-priced by the market is expected to rise with potential, additional interest rate hikes

According to the NAHB, a quarter-point rise in the rate for a 30-year fixed-rate mortgage would price out around 1 million households.

The Federal Reserve raised interest rates 4 times in 2018.
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