Industry economic indicators remained mixed, but predominately negative, as the third quarter of 2009 came to a close at the end of September. Among the statistics and forecasts released by government agencies, research firms and industry-related trade associations in recent weeks were the following:

HOUSING STARTS
The $8,000 first-time home buyer tax credit has been helping buoy demand for new homes since its passage in February, but builders “are concerned about what happens” once the incentive expires at the end of this month, according to David Crowe, chief economist for the National Association of Home Builders. “On top of the credit’s impending expiration, builders continue to grapple with a severe lack of credit for housing production loans and inappropriately low appraisals that are tied to the use of distressed properties as comps – both of which blunted the tax credit’s positive effect,” Crowe said. He added that, together, the three challenges “threaten to completely stifle the upward momentum we’ve seen in the first half of 2009.” NAHB is calling on Congress to extend the first-time home buyer tax credit for another year and to offer it to all income-eligible buyers of primary residences. A 3% decline in single-family housing starts for August essentially erased the previous month’s gain, bringing production back to a 479,000-unit annual rate, the NAHB reported.

NEW- AND EXISTING-HOME SALES
Contract activity for pending home sales has risen for six straight months, a pattern not seen in the history of the index, according to the National Association of Realtors, whose latest “Pending Home Sales Index” is at its highest level since June 2007. “Housing market momentum has clearly turned for the better,” said Lawrence Yun, chief economist for the Washington, DC-based NAR. Yun added that housing affordability has been at record highs this year with the added stimulus of a first-time buyer tax credit. The NAR estimates that between 1.8 and 2 million first-time buyers will take advantage of the $8,000 tax credit this year, with about 350,000 additional sales that would not have taken place without the credit. In the meantime, a “very positive” indicator for sales of newly built, single-family homes was a continued decline in the inventory of new homes for sale, according to the NAHB. The inventory declined for a 28th consecutive month in August, to 262,000 units, bringing home builders down to a seven-month supply at the current sales pace.

CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities declined in August compared to the same month a year earlier, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the association’s monthly “Trend of Business” survey reported that overall cabinet sales fell 27.2% in August, compared to August of 2008. Sales of stock cabinets declined 25.6%, while semi-custom sales fell 30.6% and custom cabinet sales dropped 21.9%, the KCMA reported. Year-to-date sales through the first eight months of 2009 were down 31.3% compared to the January-August period of 2008, the KCMA added.

APPLIANCE SHIPMENTS
Factory shipments of major home appliances, mirroring trends in other key product categories, fell in August, to 4.3 million units, down 9.4% from the 4.7 million units shipped in August, 2008, says the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported year-to-date shipments through August at 40.3 million units, off 18.4% from the same eight-month period last year, when 49.3 million units were shipped. Declines were posted in all key product categories, including gas and electric cooking, kitchen clean-up (dishwashers, disposers and compactors) and food preservation (refrigerators and freezers), AHAM said.

Market Analysis

Pace of International Home Purchasing Reported Off Sharply Due to Recession

Washington, DC — Interest in U.S. real estate by international buyers, which helped fuel growth in the housing market earlier this decade, has significantly declined due to the worldwide recession and credit crunch, the National Association of Realtors reported last month.

According to the latest in a series of surveys investigating international home-buying activity in the U.S., the share of realtor clientele who are foreign buyers is smaller than in previous years – down 3% from the 26% reported in the 2008 study. During the 12-month period studied, an estimated 154,000 homes were sold to foreign nationals, down from approximately 170,000 international transactions during the previous 12 months, according to the Washington, DC-based NAR.

Lawrence Yun, NAR chief economist, said that recent improvements in the credit market will help reverse the slide in foreign buyers. “Stock market gains and improving bank balance sheets will permit a greater amount of lending for second-home purchases,” he observed.

“In addition, expanding foreign economies for international buyers and favorable exchange rates give them more purchasing power, particularly in a period of record high affordability conditions in the U.S. Property investment here generally builds wealth over the long term.”

The top five countries of origin for foreign buyers were Canada, with 17.6% of buyers; the United Kingdom, 10.5%; Mexico, 9.8%; India, 8.5%; and China, 5.4%, according to the NAR. The percentage of buyers from Canada, the U.K. and China declined from the previous study, while purchasers from Mexico and India increased, the trade association added.

The prime purpose for purchasing a property in the U.S. is to use it for a vacation home, cited by 33.9% of respondents; for both investment and vacations, 23.5%; as a residential rental property for investment, 18.3%; and commercial property for investment, 3.5%.