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Builder confidence low, but holds steady

BY HBSDEALER Staff

According to the National Association of Home Builders/Wells Fargo Housing Market Index, builder confidence remained steady in August at 16.

The index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either “good,” “fair” or “poor.”

Two out of three of the indicator’s component indexes posted gains in August, including a one-point rise in the index gauging current sales conditions, to 16, and a two-point uptick in the index gauging sales expectations for the next six months, to 25. The component gauging traffic of prospective buyers remained unchanged at 12.

“With the passage of crucial housing legislation last month that created an attractive home buyer tax credit, there is a sense that home sales may soon be reaching a turning point,” predicted NAHB president Sandy Dunn, in a statement.

NAHB chief economist David Seiders pointed out that the builder confidence index still is at a record low. Still, he said it’s “a good sign that two out of three of the HMI’s component indexes rose in August, and this may be an indication that we are nearing the bottom of the long downswing in new home sales.”

Regionally, the Northeast and Midwest each posted gains in builder confidence, with the Northeast up two points to 16 and the Midwest up four points to 14. Meanwhile, the South remained unchanged at 20, and the West, whose new homes market has been heavily impacted by an upswing in foreclosure sales at cut-rate prices, posted a decline of three points to 11.

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Ace names new director of retail training

BY HBSDEALER Staff

Ace Hardware has promoted 22-year company veteran Rich Lynch to director of retail training at the co-op’s Oak Brook, Ill., headquarters.

Lynch, 44, will be responsible for developing and executing an enhanced store training curriculum, rounding out training offerings through Ace’s learning management system and working with Ace retailers to implement in-store training programs.

Lynch began his career at Ace in 1986 as dealer services representative, where he worked with Ace retailers on mainframe-based margin and inventory management services. He has also held such positions as retail development manager and retail training manager and has worked in the areas of Store Development, Ace Rental Place, Ace Commercial and Industrial Supply (now known as B2B), Reprographics/Graphic Services, Category Management and Ace Contractor Center. During his high school and college years, Lynch worked at a local Ace Hardware store in Elk Grove Village, Ill.

“This is a much-deserved promotion for Rich,” said Ken Nichols, Ace’s senior vp-retail operations. “For more than 20 years, he has consistently added value and implemented ideas that have ensured continued progress for our company.”

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Despite stats, homeowner confidence high

BY HBSDEALER Staff

Two-thirds of homeowners believe their houses are immune from the woes of the housing market downturn. That was the consensus of a recent homeowner confidence survey conducted by the Zillow real estate group in the second quarter of 2008.

In what might be described as irrational exuberance: these same homeowners are forecasting even better days over the next six months. Zillow’s own real estate market reports found that 77 percent of U.S. homes lost value in the past 12 months.

Underscoring the wide gap between homeowners’ apparently inflated perception of their home values and the market reality, Zillow created the Home Value Misperception Index, which is the difference between the adjusted percentage of homeowners who believe their home value increased over the past year and the adjusted percentage of homes that have increased in value. Nationwide, the Q2 Home Value Misperception Index is 32, reflecting this broad gap. Those in the West, which has the highest proportion of homes that declined in value during the quarter (88 percent), seem to have the best grasp on reality with a Misperception Index of 23, while those in the South have the widest gap at 36.

Those numbers might bode well for home channel companies. The survey showed that homeowners who believe their homes have increased in value are significantly more likely to plan major home improvements (22 percent) than those who believe their home’s value has decreased (14 percent). The Zillow survey also found that 64 percent of homeowners are planning to undertake a home improvement project in the next six months.

Those stats are compatible with Ace Hardware’s recent findings. Ace said it surveyed 1,000 homeowners in February 2008 and found that nearly 75 percent of respondents said they plan to do home improvement projects within the six months following February, and 49 percent planned on spending more than $1,000 on home improvement projects this year.

Ace spokesman Christopher Boniface said the co-op’s same-store sales have started to climb in June and July, which it sees as an indicator that homeowners are focused on undertaking smaller, manageable projects to improve their homes. “Our lawn and garden category in particular has been especially strong this spring and summer selling season, and we anticipate our business to continue to trend upward for the rest of the year,” he said.

According to Zillow’s survey, homeowner’s short-term outlook is even more optimistic than current perception, with 75 percent of homeowners expecting their home value to increase or stay the same over the next six months, while 25 percent expect a decline. The same level of optimism doesn’t extend to neighboring homes, however, as 42 percent expect values in their local market to drop, and 58 percent think values will increase or remain the same.

Stan Humphries, vp-data and analytics with Zillow, said the disconnect between homeowners’ perception of their homes and the reality of the market is due to a combination of “inattention and a fair bit of denial” that causes people to believe their home is insulated from the woes of the market that affect others, but not them.

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