Market on Upswing as 2019 Concludes
The Housing and remodeling markets were on a decided upswing as 2019 reached its conclusion, and continued growth is being projected for this year (see related Forecast, Page 42). Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
Home builders are “seeing more opportunities” as market conditions remain “solid,” the National Association of Home Builders reported last month. According to the Washington, DC-based NAHB, builder sentiment remains positive, with association members seeing an uptick in buyer traffic. “Led by lower mortgage rates, the pace of single-family permits has been increasing since April, and the rate of single-family starts has grown since May,” said NAHB Chief Economist Robert Dietz. “Solid wage growth, healthy employment gains and an increase in household formations are also contributing to the steady rise in home production.” Housing starts are pegged at a seasonally adjusted annual rate of about 1.3 million units, while builder confidence is at the highest levels it has been all year, the NAHB said. Housing affordability also rose to its highest level in three years in the third quarter of 2019, the NAHB added.
Residential remodelers are reporting “increased activity,” especially in areas of the country impacted by recent natural disasters, according to the association. The NAHB Remodeling Market Index (RMI), a gauge of current remodeling activity and future indicators, posted a reading of 55 in the third quarter of 2019, similar to the previous quarter. The RMI has been consistently above 50 since the second quarter of 2013, indicating that more remodelers report that market activity is higher (compared to the prior quarter) than report it is lower. “The demand for remodeling is fueled by a healthy labor market and low interest rates,” noted Dietz. Remodeling activity, however, “is still constrained by high costs and lack of skilled labor,” he added.
The recent increase in existing-home sales “is encouraging,” and is expected to follow a pattern of growth in the coming months, the National Association of Realtors said last month. “Historically low interest rates, continuing job expansion, higher weekly earnings and low mortgage rates are undoubtedly contributing to the higher numbers,” said Lawrence Yun, chief economist for the Washington, DC-based NAR. “We will likely continue to see sales climb as long as potential buyers are presented with an adequate supply of inventory,” Yun observed. “The issuance of more housing permits is a very positive sign, and a good step toward more inventory,” added Yun, citing the latest data for housing starts. Existing-home sales, estimated to hit 5.36 million units this year, are being projected to rise 3.7%, to 5.56 million units, in 2020 (see related graph above).