The housing market, expected to cool down from its blistering pace in recent months, should post new records in several key components this year, including home sales, remodeling expenditures and cabinet sales, the latest economic barometers reveal. Among the key statistics released by government agencies, research firms and industry-related trade associations in recent weeks were the following:
Residential remodeling activity continued to grow in the second quarter of 2005, fueled by the high rates of home sales and home price appreciation, the National Association of Home Builders reported last month. According to the NAHB’s quarterly Remodeling Market Index (RMI), the second-quarter results were slightly below the seasonally adjusted first quarter of 2005, but remained in the positive growth range. The RMI “still shows above-average activity for the past quarter and this will continue into the third quarter,” the NAHB said. The Index is derived from a quarterly national survey of more than 500 remodelers, and measures both current market conditions and future expectations.
NEW- & EXISTING-HOME SALES
Home sales are expected to trend down from record levels during the second half of 2005, but should easily set annual records for both new- and existing-home sales, the National Association of Realtors predicted last month. Existing-home sales are forecast to increase 2.9%, to 6.98 million units for 2005, while new-home sales are expected to rise 4.8%, to 1.26 million units this year, according to the Washington, DC-based NAR. Total housing starts – single-family and multifamily – should grow by 3.2%, to 2.02 million units, the highest level since 1978, while single-family starts are projected to set a record of 1.67 million, the NAR said. “The housing market is probably close to a peak right now in terms of sales activity, but there is tremendous momentum,” said David Lereah, NAR’s chief economist. “Sales are expected to coast at historically high levels into next year, but they will trend slightly downward.”
CABINET & VANITY SALES
Sales of kitchen cabinets and bathroom vanities rose 12.4% in July over sales the same month a year earlier, the Kitchen Cabinet Manufacturers Association said last month. According to the Reston, VA-based KCMA, manufacturers participating in the its monthly “Trend of Business” survey reported that sales of stock cabinets were up 11% for the month, while semi-custom cabinet sales increased 16.1% and custom cabinet sales gained 3.8%. Year-to-date cabinet sales for the first seven months of 2005 were up 14.5% over the same period a year ago, the KCMA added (see related graph above).
Domestic shipments of major home appliances rose in July, reversing a year-long trend of month-to-month declines compared to the previous record year, the Association of Home Appliance Manufacturers reported. According to the Washington, DC-based AHAM, some 5.932 million appliances were shipped in July, up 7% from the 5.542 million units shipped in July of 2004. Year-to-date shipments for the first seven months of 2005 were pacing just 0.5% below the record pace established last year, AHAM noted. According to the latest AHAM forecast, released in mid-August, approximately 78.58 million appliances are expected to be shipped this year, down from the record 79.21 million units shipped in ’04, but still the second-best year in the industry’s history. AHAM’s 2006 forecast projects that a record 80.29 million appliances will be shipped.
Most Areas See Historically High Home-Price Gains During Second Quarter of 2005
WASHINGTON, DC — Most metropolitan areas witnessed historically strong annual increases in median existing-home prices during the second quarter, according to the latest survey by the National Association of Realtors.