News, Trends, Community - January

Building Supplies

Remodelers Rely More on a Single Source

Remodelers and builders are increasingly using single sources of supplies for most of their building products, according to a survey by the Indianapolis-based Farnsworth Group.

Builders and remodelers reported lumber and building material dealers as their primary source for purchasing materials; these top suppliers get about 70 percent of the business. Warehouse home centers serve as the primary source for nearly one-third of remodelers but just 12 percent of builders.

Builders and remodelers cited somewhat different priorities for selecting suppliers though product availability was the No. 1 factor for both. For remodelers, availability was followed by quality products, customer service and price, which were all rated similarly. The importance of availability as the top factor in the decision-making process illustrates that, in some cases, remodelers are willing to pay a little more for the sake of having the product in stock and ready to install.

The study indicated a similar pattern in the way builders and remodelers prefer to receive information from manufacturers and suppliers. Their preferences for being contacted (from most preferred to least) are via e-mail, magazine advertising, Internet, Web sites and newsletters.

Design

Remodeling Increases for Architects

Remodeling activity during the third quarter of 2010 showed an increase compared with the same period a year earlier, according to the Washington, D.C.-based American Institute of Architects Home Design Trends Survey. Additions, alterations, and kitchen and bath remodeling projects are reported as improving by a majority of residential architects with only a small minority reporting market conditions weakening in their areas, the report says.

Distressed homes accounted for 34 percent of third-quarter 2010 sales, up from 30 percent a year earlier.

Source: National Association of Realtors

Windows & Doors

Demand to Rise 6.6 Percent

Demand for windows and doors in the U.S. is forecast to rise 6.6 percent per year to $31.2 billion in 2014. This is a rebound from the 2004-09 period when demand fell 4.3 percent annually, reflecting the collapse of the housing market between 2007-09. Although housing completions will remain below the level reached at their cyclical peak in 2006, the recovery in new-home construction will fuel above-average gains in the residential market for windows and doors through 2014, according to The Freedonia Group Inc., a Cleveland-based industry market-research firm.

Consumers

Americans Uncertain about Housing

Washington, D.C.-based Fannie Mae’s most recent housing survey finds Americans are less certain the housing market has bottomed and continue to be wary of buying a home. The Third Quarter 2010 Fannie Mae National Housing Survey found fewer Americans think it is a good time to buy a home (68 percent, down 2 percentage points since June), and more Americans think it is a bad time to buy (29 percent, up 3 percentage points). Similar to the last survey, an overwhelming majority of Americans believe it is a bad time to sell a home (85 percent, up 2 percentage points since June).

Building Materials

Drywall Prices on Upswing

Drywall prices are expected to increase approximately 25 percent in 2011, according to published reports. Chicago-based USG Corp. announced an increase in November 2010, followed by similar announcements from Valley Forge, Pa.-based CertainTeed Corp.; Charlotte, N.C.-based National Gypsum Co.; Reston, Va.-based Lafarge North America; and Austin, Texas-based Temple-Inland. The drywall makers have sustained losses in recent years as the decline in new-home construction and decreased demand for the product has driven prices down. USG has introduced a lightweight version of its Sheetrock brand drywall that it hopes will command a higher price, according to a Dow Jones Newswires story.

The majority of high- (67 percent), upper-middle- (65 percent) and middle- (59 percent) income respondents, as well as nearly half of low-income respondents (48 percent), indicated they believe a completely green home would be affordable to live in or maintain. Yet only high-income respondents were more likely to indicate that a completely green home would be affordable to purchase (71 percent).

Source: Whirlpool Corp. and Habitat for Humanity survey conducted by the NAHB Research Center

Incentives

Energy Tax Credit Slashed

Tax breaks for installing energy-efficiency upgrades, such as windows, doors, roofing, insulation and related products, just got smaller. “The credit offers little practical incentive for homeowners or remodelers to make energy-efficiency improvements,” says the Washington, D.C.-based National Association of Home Builders Remodelers in an online post.

The Existing Home Retrofit Tax Credit (25C) was set to expire at the end of 2010, but tax legislation passed by Congress in December included an extension of the 25C credit through 2011. However, modifications reduced the credit value to its 2006-07 levels of 10 percent of the product costs, not including installation, with a maximum credit for all qualified retrofits of $500, according to a report published by NAHBR. The legislation also reinstates lifetime credit caps that disqualify any homeowner who has claimed more than $500 in 25C tax credits since Jan. 1, 2005, from any further credits.

Homeownership

Housing Remains Affordable

The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) reports housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5 percent for the first time since the series was first compiled nearly two decades ago.

The HOI indicated that 72.1 percent of new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5 percent set during the first quarter of 2009 and marked the seventh consecutive quarter the index rose above 70 percent. Until 2009, the HOI rarely topped 65 percent and never reached 70 percent.

Home Values

Prices Hold

Fully half of metropolitan areas tracked in third quarter 2010 continued to show modest home price increases from one year ago, despite a sharp decline in home sales after the deadline for the home-buyer tax credit, according to the latest survey by the Washington, D.C.-based National Association of Realtors.

In the third quarter, 77 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with third-quarter 2009, including 11 with double-digit increases; two were unchanged and 76 metros showed price declines. In third-quarter 2009, only 30 MSAs experienced annual price gains.

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