Market, Facing Challenges, Plows Ahead
The nation’s housing market continues to stagger along, posting growth even in the face of myriad challenges, while residential remodeling, although still strong, seems headed for a slowdown, market analysts said last month. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
Single-family home builders “continue to see positive conditions” for housing, although they’re “still being somewhat cautious as they continue to deal with concerns about a slowing economy and supply-side challenges that impact housing affordability,” Greg Ugalde, chairman of the National Association of Home Builders, said last month. Single-family housing starts and permits remained strong through the third quarter of 2019 – continuing a rebound that began this spring – even as the multi-family sector posted sharp declines, according to the Washington, DC-based NAHB, which also reported that builder confidence in the market for newly built single-family homes rose in October to its highest point since February 2018.
Continued “weakness” in existing-home sales and new construction “will lead to sluggish remodeling activity next year,” according to the latest Leading Indicator of Remodeling Activity (LIRA), released in mid-October by the Joint Center for Housing Studies of Harvard University (see related graph, above). The LIRA projects that annual home improvement expenditures will post a modest decline of 0.3% through the third quarter of 2020. “Slowdowns in other key indicators of improvement spending – project permits, building material sales and home prices – also suggest the remodeling market may be reaching a turning point,” said Joint Center managing director Chris Herbert. At annual expenditures of $325 billion, remodeling spending in the coming year is expected to essentially remain flat, although low mortgage interest rates “may help counter some of these headwinds, which could buoy home improvement expenditures over the coming year,” the Joint Center said.
Increased financial wealth and low mortgage rates have boosted the demand for vacation homes, according to the National Association of Realtors. “As of 2018, household net worth reached an all-time high of $100.3 trillion, nearly double from a decade ago when wealth declined during the recession,” said NAR chief economist Lawrence Yun. “Some of this tremendous growth in wealth increased demand for vacation homes.” Although most homebuyers purchase their residence with an intent to use the property as a primary home, that is not always the case, Yun said, noting that a portion of homeowners purchase a second home expecting to use it as a general family vacation spot, a tenant rental, a means to gain equity, or – upon retirement – a future primary residence.
Domestic shipments of major home appliances declined in September compared to the same month in 2018, while year-to-date shipments continue to lag those of a year ago, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that September appliance shipments totaled 7.19 million units, down 4.5% from the 7.53 million units shipped in September of 2018. Year-to-date shipments through September were down 4.6% from the same nine-month period a year ago, AHAM said.