‘Slow, Steady Climb’ Seen for Housing
While labor shortages, affordability issues and other challenges persist, housing and remodeling industry analysts continue to predict a slow, steady ascent through the balance of 2019. Among the key statistics and forecasts released in recent weeks by government agencies, research firms and industry-related trade associations were the following:
While builders remain cautious due to affordability concerns, expectations are that potential new-home buyers “will respond to lower interest rates and the housing market will continue on a slow, steady climb,” Greg Ugalde, chairman of the National Association of Home Builders, said last month. Total housing starts were pegged at a seasonally adjusted annual rate of 1.24 million units, but “soft” permit numbers for single-family housing reflect builder “concerns about housing affordability and construction costs,” said Robert Dietz, chief economist for the Washington, DC-based NAHB.
The ongoing shortage of skilled labor and subcontractors continues to be a major concern for residential remodelers, who are vying to keep their prices competitive while dealing with the increasing costs of labor, a National Association of Home Builders survey found. According to the third-quarter 2018 poll whose results were released last month, roughly 85% of surveyed remodelers reported shortages of workers available to perform finished or rough carpentry, and nearly half (48%) termed the shortages as serious. “Although these percentages are down slightly from a year earlier, they remain seriously elevated,” the NAHB said, adding that labor shortages were reported in 12 of 16 categories surveyed (see related graph, above right). The most common effects of the shortages have been causing remodelers to pay higher wages, forcing them to raise prices to customers and making it difficult to complete projects on time, the NAHB said.
Continued economic expansion, rising home sales and an increase in wage growth that’s on par with home price growth are being projected for the second half of 2019, according to a consensus of experts at a real-estate forum sponsored in May by the National Association of Realtors. “Home sales should be much stronger based on the economic fundamentals of jobs, interest rates, population and consumer confidence,” said Lawrence Yun, chief economist for the Washington, DC-based NAR. After several years of wage growth outpacing home price growth, both are more closely aligned this year, Yun noted. “This shift is a healthy development toward keeping housing affordability stable.” While existing-home sales are down 4.4% from a year ago, “we are seeing historically low mortgage rates combined with pent-up demand, so buyers will look to take advantage,” Yun predicted.
Domestic shipments of major home appliances, impacted by declines in all key product categories, fell sharply in April compared to the same month in 2018, according to the Association of Home Appliance Manufacturers. The Washington, DC-based AHAM reported last month that April appliance shipments totaled 5.74 million units, down 16.7% from the 6.89 million units shipped in April 2018. Year-to-date appliance shipments through April were off 7.1% from the same four-month period in 2018, AHAM said.