March 2012 Overview

Distribution

Big-box Retailers Not Just for DIYers

Contractors make nearly half of their tool and building supply purchases from big-box retailers, according to a national research study conducted by Syracuse, N.Y.-based Eric Mower + Associates.

According to the research, 46 percent of contractors purchase hand tools, 47 percent purchase power tools and 49 percent purchase accessories from big-box retailers; 42 percent, 35 percent and 36 percent purchase hand tools, power tools and accessories from distributors, respectively.

Contractors perceived big-box retailers to have a better variety of products, lower pricing and greater convenience as a one-stop shop, according to the study. Of the respondents, 63 percent would prefer to make small-volume purchases at big-box retailers.

Those who prefer purchasing through distributors said it was for their customer service (75 percent), relationships (70 percent), knowledge (63 percent) and delivery (54 percent), all of which ranked significantly higher when compared to retailers. Distributors were also ranked high for carrying pro tools, shipping directly to the contractor site and offering credit arrangements.

Leading Indicator

Glimmers of Hope for Remodeling in 2012

After a slow start, home-improvement spending is expected to trend up later this year, according to the Leading Indicator of Remodeling Activity released by the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University, Cambridge, Mass. If this momentum continues to build during the second half of the year, remodeling activity is on course to end 2012 on a positive note, according to JCHS.

"Sales of existing homes have been increasing in recent months, offering more opportunities for home improvement projects," says Kermit Baker, director of the Remodeling Futures Program. "As lending institutions become less fearful of the real-estate sector, financing will become more readily available to owners looking to undertake remodeling."

NAHB

Moore Is New NHAB Remodelers Chair

George "Geep" Moore, CGR, CAPS, GMR, and owner/president of Elm Grove, La.-based Moore-Built Construction & Restoration Inc., was appointed the 2012 chairman of the National Association of Home Builders Remodelers (NAHBR) during the International Builders' Show in Orlando, Fla. He is a past president of the Louisiana Home Builders Association and Northwest Louisiana Home Builders Association and served as chairman of the Louisiana Remodelers Council. Currently, Moore serves on the board of directors of the National Association of Home Builders and served six years on the NAHB Remodelers board of trustees. Vice chair is Bill Shaw, CGR, CGB, CAPS, William Shaw and Associates, Houston; second vice chair is Paul Sullivan, CGR, CAPS, The Sullivan Co. Inc., Newton, Mass.; and NAHBR's past chair is Bob Peterson, CGR, CAPS, CGP, Associates in Building & Design Ltd., Fort Collins, Colo.

Green

Green Remodeling Growing Quickly

One-third (34 percent) of remodelers expect to be doing mostly green work by 2016, a 150 percent increase compared with 2011 activity levels, according to New York-based McGraw-Hill Construction, a part of The McGraw-Hill Cos. Green homes, which comprised 17 percent of the overall residential construction market in 2011, are expected to grow to between 29 percent and 38 percent of the market by 2016. By value, this equates to a five-fold increase, growing from $17 billion in 2011 to $87 to $114 billion in 2016, based on the five-year forecast for overall residential construction.

House Price Index

House Prices Fall Moderately

U.S. house prices fell slightly in the fourth quarter of 2011, according to the Washington, D.C.-based Federal Housing Finance Agency's seasonally adjusted purchase-only house-price index (HPI). The HPI, calculated using home-sales-price information from Fannie Mae and Freddie Mac-acquired mortgages, was 0.1 percent lower on a seasonally adjusted basis in the fourth quarter than in the third quarter. On an unadjusted basis, prices fell 1.1 percent during the quarter. During the past year, seasonally adjusted prices fell 2.4 percent from fourth quarter 2010 to fourth quarter 2011.

Demographics

65 and Older Population Growing Faster

The U.S. population 65 and older is now the largest in terms of size and percent of the population, compared with any previous census, according to the Washington, D.C.-based U.S. Census Bureau. The group grew at a faster rate than the total population between 2000 and 2010. According to the 2010 Census, there were 40.3 million people 65 and older on April 1, 2010, an increase of 5.3 million since the 2000 Census.

New Construction

Builder Confidence Increases for Fifth Consecutive Month

Home-builder confidence in the market for new single-family homes increased for the fifth consecutive month in February, rising from 25 to 29 on the Washington, D.C.-based NAHB/Wells Fargo Housing Market Index (HMI). It is the highest level the index has reached in more than four years. "This is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging," says NAHB Chief Economist David Crowe. "However, it is important to remember the HMI is still very low."

Existing-Home Sales

Sales Rise for Three Months

Existing-home sales continued on an uptrend in December 2011, rising for three consecutive months and remaining above one year ago, according to the Washington, D.C.-based National Association of Realtors. Existing-home sales rose 5 percent to a seasonally adjusted annual rate of 4.61 million in December 2011 from a downwardly revised 4.39 million in November 2011 and are 3.6 percent higher than the 4.45 million-unit level in December 2010. For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.

Affordability

Home Prices Boost Affordability

Housing affordability conditions improved in most metropolitan areas from softer existing-home prices and record-low mortgage-interest rates in the fourth quarter, with rising sales and lower inventory creating more balanced conditions, according to the National Association of Realtors, Washington, D.C. The median existing single-family home price rose in 29 out of 149 metropolitan statistical areas (MSAs) in the fourth quarter from one year earlier; two were unchanged and 118 areas had price declines.

The national median existing single-family home price was $163,500 in the fourth quarter, down 4.2 percent from $170,600 in the fourth quarter of 2010. The median identifies that half of the homes sold for more and half sold for less. Distressed homes—foreclosures and short sales, which sold at discounts averaging 15 to 20 percent—accounted for 30 percent of fourth-quarter sales; they were at 34 percent one year earlier.

New Housing

Housing Starts Rise 1.5 Percent

Building on significant upward revisions to numbers for the previous two months, nationwide production of new single-family homes and apartments increased 1.5 percent to a seasonally adjusted annual rate of nearly 700,000 units in January, according to the Washington, D.C.-based U.S. Commerce Department. This marks the second-best pace of overall housing production since October 2008.

Education

Lowe's Commercial Services to Sponsor NAHB Education

The Washington, D.C.-based National Association of Home Builders (NAHB) has selected Lowe's Commercial Services to be the exclusive sponsor of NAHB Education for three years, from 2012 through 2014. Classes taught by experts are held at local home-builder associations throughout the country, as well as at NAHB's International Builders' Show and other national venues. Every year, between 2,500 and 5,000 members of the home-building industry receive professional designations, such as Graduate Master Builder (GMB), Master in Residential Marketing (MIRM), Graduate Master Remodeler (GMR), Certified Aging-in-Place Specialist (CAPS) and Certified Green Professional (CGP). See NAHB.org/designations for a full listing of the professional designations NAHB offers.

Statistics

Total housing inventory at the end of December 2011 dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November 2011. Source: National Association of Realtors

The list of improving housing markets expanded by 29 metros in February to include a total of 98 entries. Thirty-six states are now represented by at least one market on the list. Source: National Association of Home Builders/First American Improving Markets Index

Sixty-two percent of consumers find it difficult to locate product safety information on building materials products. Source: Underwriters Laboratories

On average, 71 percent of building manufacturers believe when they create environmentally friendly products, they are profitable or somewhat profitable. Source: Underwriters Laboratories

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