The Countertop News Blog is written with the countertop professional in mind, with news, articles, resources and opinions geared for the industry.
Thursday, September 24, 2015
Countertop Industry Market Update
Knowing all of the latest developments concerning the building/housing market is something all countertop fabricators and industry professionals stand to benefit by doing. As we transition into the final quarter of the year, this is a great time to take a look at how the market is doing. A quick scan of the latest trend predictions and statistics shows nothing but growth in the industry. While this is good news for countertop professionals, it may leave them wondering “How long will it last?” Fortunately, we don’t see an end anytime soon. The numbers look promising, especially when considering the positive outlook in our last housing-market report in June.
Last month, the North American Building Material Distribution Association (NABMDA) released their Spring 2015 Quarterly Sales Trends Report. The report provides analyses, forecasts and insights for manufacturers and distributors of building materials. March and April were both very strong months according to the latest findings. As many as 70 percent of industry professionals said that this was enough for them to plan on adding personnel sometime during the course of the year.
Building-material distributors experienced 10 percent growth in the month of March with a forecasted growth rate of 6 percent for boards and panels, flooring, hardware and storage for the rest of the year.
According to data from the U.S. Department of Housing and Urban Development (HUD), the National Association of Home Builders (NAHB) reported in August that housing starts increased by 0.2 percent to a seasonally adjusted annual rate of 1.206 million homes. This was just enough to mark the highest level of housing starts since October 2007.
The high demand of single-family housing is responsible for the increase in starts, which rose by 12.8 percent to a seasonally adjusted annual rate of 782,000 homes.
Looking at housing starts by region, the highest gains were in the Midwest at 20.1 percent and the South at 7.7 percent. However, starts decreased by 3.1 percent in the West and 27.5 percent in the Northeast.
Last week, the NAHB reported that builder confidence in new single-family homes continued its long and steady increase, which pushed the NAHB/Wells Fargo Housing Market Index (HMI) up one point to 62, which is the highest it has been since October 2005. “The HMI shows that single-family housing is making solid progress,” said Woods, noting that there have been some concerns about lot and worker availability.
The HMI is based on a monthly survey the NAHB has been issuing for the last 30 years. The survey asks builders to gauge the current state of single-family home sales and what they expect for the next six months. In addition, the survey asks builders to rate the quantity of prospective buyers on a five-point scale from very low to very high. Two of three components used to calculate the HMI showed increases in the September survey: Prospect traffic rose two points to 47 and current sales rose one point to 67. However, sales expectations for the next six months dropped two points to 68. Looking at the regional HMI scores for September, the West and the South each rose by one point to 64, and the Midwest increased one point to 59. The Northeast, however, dropped by one point to 46.
Just last week, Qualified Remodeler reported that a new remodeling forecast was launched by John Burns Real Estate Consulting in Irvine, Calif. The company is considered a major analytics firm for the residential construction market, and its first official forecast predicts that residential remodeling will grow by 7.8 percent in 2016 to $300 billion.
The survey also breaks down last year’s remodeling statistics. In 2014, the remodeling market totaled $266 billion. Of that, $113.6 billion was for large projects (more than $5,000) while $146.1 billion was for small projects, and $5.9 billion went to disaster repair. In addition, $108 billion was spent on building materials by professional contractors while do-it-yourself (DIY) homeowners spent only $69.3 billion. Contractors also brought in $88.2 billion for labor and other services.
The new forecast, dubbed Burns Residential Repair and Remodel Spending, is being called the “first true forecast of remodeling activity” in the United States. This forecast relies on intensive data gathering from several sources, including a proprietary model using data from property-management agencies, the biennial American Housing Survey, rental-home investment firms, apartment-building owner surveys and in-house pricing surveys. The closest we have had to it is the Leading Indicator of Remodeling Activity (LIRA) from Harvard University’s Joint Center for Housing Studies’ Remodeling Futures Program and remodeler sentiment as tracked by the NAHB.