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Builder confidence rises in May

Lumber’s high prices makes it tough for builders to produce competitively priced homes for newcomers.

BY HBSDealer Staff

Additional proof that consumer interest in single-family homes is at a strong level was provided by the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

Builder confidence in the market for newly-built single-family homes rose two points to a level of 70 in May after a downwardly revised April reading on the HMI. This is the fourth time the HMI has reached 70 or higher this year.

“The solid May report shows that builders are buoyed by growing consumer demand for single-family homes,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “However, the record-high cost of lumber is hurting builders’ bottom lines and making it more difficult to produce competitively priced houses for newcomers to the market.”

“Tight housing inventory, employment gains and demographic tailwinds should continue to boost demand for newly-built single-family homes,” said NAHB Chief Economist Robert Dietz. “With these fundamentals in place, the housing market should improve at a steady, gradual pace in the months ahead.”

The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI chart gauging current sales conditions increased two points to 76 in May while the indexes measuring buyer traffic and expectations in the next six months remained unchanged at 51 and 77, respectively.

Looking at the three-month moving averages for regional HMI scores, the West and Northeast held steady at 76 and 55, respectively. Meanwhile, the South and Midwest each edged down one point to respective levels of 72 and 65.

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NRLA names Mid-Atlantic regional director

As EBMDA director, Philip Jagiela will work with membership in Delaware, Maryland, Pennsylvania, and Washington D.C.

BY HBSDealer Staff

The Northeastern Retail Lumber Association has hired Philip Jagiela as regional director for the Eastern Building Material Dealers Association (EBMDA).

As regional director, Jagiela will be responsible for servicing and expanding the association’s membership in Delaware, Maryland, Pennsylvania, and Washington D.C.

“This is an exciting time for the NRLA,” said NRLA President Rita Ferris. “Philip brings an entrepreneurial spirit and a track-record of working with not-for-profit associations to add value, enhance programs, and increase membership.”

Regarding his new role Jagiela said, “”I am truly looking forward to being a part of the NRLA team. I am excited for the opportunity to meet our current members, and establish relationships with our soon-to-be members to enhance our overall brand.”

Jagiela brings 30 years of experience as an entrepreneur and association executive. During this time, he founded the Aries Transportation Group, served as Executive Director of the National Limousine Association, and was CEO of PALM Association Management and Consulting.

Eastern Building Material Dealers Association (EBMDA) is a non-profit trade association representing independent building material dealers and their associates in Delaware, Maryland, Pennsylvania, and Washington D.C.

The Northeastern Retail Lumber Association (NRLA) is a 1,100-member association representing independent lumber and building material suppliers and associated businesses in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Washington, D.C.

 

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Late spring checks Depot’s Q1 sales

Not counting seasonal, strong results for the Atlanta-based giant.

BY HBSDealer Staff

A late start to the spring selling season curtailed The Home Depot’s first quarter results, but the company still produced big sales and income gains.

The Atlanta-based retail giant posted first quarter net sales of $24.9 billion, up 4.4% from $23.9 billion in the first quarter last year. Comp-store sales in the U.S wee positive 3.9%. Total company comps were 4.2%.

The company’s net income swelled to $2.4 billion, compared to $2.0 billion in the first quarter of 2017.

CEO Craig Menear described a slow start to the spring selling season. “Outside of our seasonal business, we had solid results in all markets and categories and are seeing strong momentum in all lines of business during these first few weeks of May,” he said. Menear also pointed to a “favorable housing and macroeconomic backdrop.”

Wall Street had expected comp-store sales of 5.4%, instead of the 4.2% reported in the first quarter. Expectations were also slightly higher for revenue — $25.2 billion, compared to the $25.0 billion reported. Despite the slow start, the company is maintaining its sales and earnings guidance for fiscal 2018. The company expects sales growth of about 6.7%, and comps to grow about 5.0% for the year.

The Home Depot’s total company comps figure of 4.2% continued its string of 28 consecutive quarters of positive comps. However, it was the lowest figure since the second quarter of 2015, which also registered 4.2%.

The company said its efforts to attract pro customers are bearing fruit. Sales to the pro in the first quarter again outpaced DIY sales, a common refrain in recent Home Depot earnings reports. “Investments aimed at deepening our relationships with our pro customers are yielding increased engagement, which translates to incremental spend.”

One of the company’s investments in this area is in delivery. The company bolstered its 2-hour and 4-hour delivery window options with save day car and van delivery in some markets. This move, along with others, led to double-digit delivered sales growth in the quarter, Menear said.

An estimated 35% of the company’s overall sales are to the pro customer.

Another growth area is in the company’s interconnected retail strategy. First quarter online sales grew about 20%. The retailer recently launched a program that allows customers to include and attach install services to products purchased online. “If you purchase a faucet online and want to include the installation of the faucet in your purchase, we now enable this experience,” Menear said.

 

 

 

 

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