Housing Resilient In Face of Downturn
Among the key statistics released by government agencies and
industry-related trade associations in recent weeks were the
Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities rose 4.6% in May over those in May of 2000, according to the Kitchen Cabinet Manufacturers Association. The Reston, VA-based KCMA said last month that manufacturers participating in the association's monthly "Trend of Business" survey reported that year-to-date cabinet sales through the first five months of 2001 were up 5.3% over those of the same January-May time period last year. Sales of stock cabinets year-to-date were up by 4.2%, while sales of custom cabinets were up by 12%, the KCMA further noted.
Domestic shipments of major home appliances continued their downward pattern for 2001 in May, declining by 3.1% compared to May of 2000, and remaining well behind last year's record pace, the Association of Home Appliance Manufacturers reported. According to the Washington, DC-based AHAM, year-to-date appliance shipments through May totaled some 26.36 million units, 7.1% below the total recorded for the January-May time period last year. Appliance shipments are on a pace to total just under 63 million units for the year, off the record total of about 65 million units shipped in 2000. Despite the drop, however, the totals predicted for 2001 would make this year the second-best appliance-shipment year on record, according to AHAM. The association is forecasting a rebound, projecting that appliance shipments will reach 64.1 million units in 2002.
The latest numbers tracking sales of existing single-family homes still pacing at a rate of more than 5 million units annually are "a reminder of just how strong the housing market has been during the recent economic pullback," the National Association of Realtors said last month. Pointing to recent resales and other housing industry indicators, such as mortgage applications, the Washington, DC-based NAR pointed out that housing "continues to be a popular investment choice" among U.S. consumers. "Defying all odds, the housing industry keeps fighting off the economic slowdown," the NAR said, cautioning, however, that a weakening employment picture may weaken home sales as the year progresses.
The "resilience" of the U.S. housing market, even in the face of weakness in other parts of the economy, is being confirmed by the latest round of statistics reflecting housing starts, home sales, permits and home-buyer traffic, the National Association of Home Builders reported last month. Even though housing has eased off its formerly torrid pace in recent months, and is apparently flattening, the industry as a whole "has been outperforming many other parts of the economy," the Washington, DC-based NAHB said. The NAHB also pointed to its latest survey of home builders, which indicates growing optimism and healthy levels of buyer traffic. Also of note, said the trade association, is that "in the midst of all the turmoil in the economy and housing markets, the U.S. homeownership rate held at 67.5% in the first quarter of 2001 just shy of the all-time high in the third quarter of 2000."
Consumer Sector Seen 'Saving
Dallas A strong consumer sector, and continued discretionary spending, will keep the nation from slipping into recession although the U.S. construction industry as a whole should prepare for a slowdown as the business sector continues to soften, a leading economist told construction industry executives here in late June.
Economist Raymond Torto, managing director of Boston-based Torto Wheaton Research, pointed out to construction industry leaders that the nation experienced "an extraordinary period" of growth and prosperity in the late 1990s, and noted that 2000 "was the party that gave us the hangover we are now suffering from.
"It would be totally incorrect to look back on [the recent] three-to-five-year cycle and expect the economy to come out of its [current] soft landing next year and perform as it has in the past," cautioned Torto, who spoke at a gathering organized by CMD, a leading provider of construction industry information.
Torto advised his audience to "buckle down, keep your business in line with reality and your expectations in line with reality."
He noted, however, that while the current U.S. economic slowdown will be significant, and the business sector will remain weak through the end of this year, there will not be a recession thanks primarily to the consumer sector.
A consumer sector strengthened by low interest rates and the impending tax cut "will save the economy from recession as more and more people create discretionary income by lowering their mortgage rates through refinancing," Torto observed.
"That has a dramatic effect on the economy," he said.