The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 58 in the second quarter of 2018, up one point from the previous quarter. The RMI has been consistently above 50—indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower—since the second quarter of 2013. The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.
“Remodelers across the country continue to see demand,” said NAHB Remodelers Chair Joanne Theunissen, CGP, CGR, a remodeler from Mt. Pleasant, Mich. “However, the rising cost of materials is impeding the market’s ability to be even stronger.”
Current market conditions decreased one point from the first quarter of 2018 to 57. Among its three major components, major additions and alterations waned one point to 55, minor additions and alterations decreased two points to 58, and the home maintenance and repair component rose two points to 59.
The future market indicators gained four points from the previous quarter to 59. Calls for bids fell two points to 55, amount of work committed for the next three months increased two points to 56, the backlog of remodeling jobs jumped nine points to 66 and appointments for proposals rose seven points to 61.
“Improving economic growth is supporting demand for home remodeling,” said NAHB Chief Economist Robert Dietz. “However, remodelers have to deal with rising material prices, especially lumber, and the continued shortage of labor to keep prices competitive. The labor shortage is also a factor contributing to the increasing backlog of remodeling jobs.”
Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La., today issued the following statement in support of the White House executive order on workforce development:
“NAHB applauds President Trump’s leadership for signing an executive order that will develop a national strategy to expand job-training and apprenticeship opportunities for students and workers and give them the proper tools to succeed in the American workforce.
“Given the chronic labor shortages in the home building industry, I am especially pleased to attend this important White House event. NAHB will help do it part to invest in the future workforce by pledging to train 50,000 new workers over the next five years for a career in the construction trades. The Home Builders Institute, our workforce development arm, is a national leader for career training in the home building industry. To honor the administration’s important commitment to America’s workers, we will expand our training, certification and job placement programs for underserved and at-risk youth, transitioning military, veterans, ex-offenders and displaced workers.”
The Nationals–the National Association of Home Builders’ national sales and marketing awards program–is open for entries. Honoring the best in new-home sales, marketing and design, The Nationals competition acknowledges superior new-home sales and marketing achievements by individual sales and marketing professionals, home builders and associates, and local sales and marketing councils. The deadline for entering is Oct. 25, 2018.
The program recognizes builders and consultants for outstanding product design, interior merchandising, sales office design and landscaping. The competition continues to honor the most inspired new home marketing efforts, including logo design, graphics, brochures, signage, advertisements, overall advertising campaigns, special promotions and website design.
Silver Award winners (finalists) in each category will be announced online on Nov. 20. Gold Award winners will be announced during NAHB’s International Builders’ Show(r) at The Nationals gala on Tuesday, Feb. 19, 2019, at Caesars Palace Las Vegas.
The competition is presented by the National Sales and Marketing Council (NSMC), a council of the NAHB, along with Wells Fargo Home Mortgage. Preferred sponsors include major building product manufacturers, financial institutions, home builders and developers, architects and associates in real estate.
Join the best and the brightest in new home sales and marketing by entering The Nationals: https://urldefense.proofpoint.com/v2/url?u=https-3A__www.thenationals.com_&d=DwIFAw&c=hCLxfJq9j_r9eaDl3ZiMkA&r=M8wVQlHg3ukfINJbMZzlXg&m=qLUHNz0XSYfEaZwQZ76kj8e9HVkvuT8kbQCwue3HC_8&s=qOPd-IDgjke3560SoRTrlpDyR_1Gzn1w-J0qtTS_GK4&e=.
Total housing starts fell 12.3 percent in June to a seasonally adjusted annual rate of 1.17 million units, according to newly released data from the U.S. Department of Housing and Urban Development and the Commerce Department.
The June reading of 1.17 million is the number of housing units builders would begin if they kept this pace for the next 12 months. Within this overall number, single-family starts fell 9.1 percent to 858,000 units. Meanwhile, the multifamily sector — which includes apartment buildings and condos — dropped 19.8 percent to 315,000.
Overall, permits — which are a sign of likely future housing production — dropped 2.2 percent to 1.27 million units in June, the lowest level of the year. Although single-family permits edged up 0.8 percent to 850,000, they remain at their second lowest reading of 2018. Multifamily permits fell 7.6 percent to 423,000.
“We have been warning the administration for months that the ongoing increases in lumber prices stemming from both the tariffs and profiteering this year are having a strong impact on builders’ ability to meet growing consumer demand,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “This is why we continue to urge senior officials to take leadership and resolve this issue.”
While overall production is 7.8 percent higher than its level over the same period last year, the June report raises concerns about a softening in housing production over the near term.
“The concern over material costs, especially lumber, is making it more difficult to build homes at competitive price points, particularly for newcomers entering the housing market. Moreover, the soft permit report does not suggest a significant increase in housing production in the near term,” said NAHB Senior Economist Michael Neal. “However, consumer demand for single-family housing continues to increase as the overall economy and labor market strengthen.”
Combined single- and multifamily housing starts fell in all regions of the country. Starts fell 3 percent in the West, 9.1 percent in the South, 35.8 percent in the Midwest and 6.8 percent in the Northeast.
Looking at regional permit data, permits rose 6.2 percent in the South. Permits fell 1.8 percent in the West, 16.4 percent in the Northeast and 18.7 percent in the Midwest.
Builder confidence in the market for newly-built single-family homes remained unchanged at a solid 68 reading in July on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
“Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains and low unemployment in many parts of the country,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La.
“Builders are encouraged by growing housing demand, but they continue to be burdened by rising construction material costs,” said NAHB Chief Economist Robert Dietz. “Builders need to manage these cost increases as they strive to provide competitively priced homes, especially as more first-time home buyers enter the housing market.”
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
The HMI index measuring current sales conditions remained unchanged at 74. Meanwhile, the component gauging expectations in the next six months dropped two points to 73 and the metric charting buyer traffic rose two points to 52.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 57 while the Midwest remained unchanged at 65. The West and South each fell one point to 75 and 70, respectively.
Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.