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Industry Dashboard for Jan. 21, 2013

BY HBSDEALER Staff

The needles are moving on the Housing Starts dials as residential construction jumped in December. Also moving in a positive direction are the stocks on the Home Channel Stock Roundup.

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NAHB describes home inventories as razor thin

BY Ken Clark

The National Association of Home Builders (NAHB) offered its analysis of the surge in housing starts, describing strong momentum lead by multi-family construction. 

Yesterday the Commerce Department reported housing starts increased 12.1% to a seasonally adjusted annual rate of 954,000 units.

“Builders have become increasingly optimistic about conditions in local housing markets in recent months, and this report underscores that the housing recovery is well on its way,” said Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla. “With inventories of new homes at razor thin levels, builders are moving prudently to break ground on new construction ahead of the spring buying season to meet increasing demand.”


The December housing starts report bodes well for 2013, a year in which the NAHB forecast total housing starts to rise to 932,000 for 2013. There were 780,000 starts in 2012. 

“Overall, this report represents a solid ending to 2012 and a promising start to 2013,” said NAHB senior economist Robert Denk. “Multi-family production is almost back to normal levels and while single-family starts still have a way to go, they are gaining momentum. This trend could be even stronger if not for persistently tight credit conditions for home buyers, flawed appraisal values and uncertainties regarding economic policy debates in Washington.”

Single-family housing starts rose 8.1% to a seasonally adjusted annual rate of 616,000 units in December, while multi-family production jumped 23.1%, to 338,000 units.

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Global demand for flooring to rise

BY Brae Canlen

Worldwide demand for flooring and carpets is forecast to rise 4.9% annually through 2016, according to a study by the Freedonia Group, a Cleveland-based industry market research firm. This will be an improvement from the rate during the 2006-2011 period, as countries rebound from the 2008 global economic crisis.

In terms of dollars, demand for floor coverings is projected to advance 6.8% per year to $270 billion. The primary driver of demand in developed areas will be rebounds in the residential construction markets of many countries, particularly the United States. In developing regions, rising building construction activity and growing per capita incomes will spur demand and allow households to afford more expensive floor coverings, the report said. Rising motor vehicle production in many areas will also boost overall demand for floor coverings. 

The Asia/Pacific region is forecast to see the fastest gains in floor covering demand, driven by the rapid industrialization of many countries in this region and rising personal incomes. China alone is projected to account for more than one-third of all new demand generated through 2016, strengthening its position as the largest market for flooring and carpets in the world. North America is expected to see the second fastest gains in flooring and carpet demand, driven by an expected rebound in the U.S. housing market.  Gains in developed areas such as Western Europe, Australia and Japan will not be as strong as those in North America or developing regions. However, a rebound in new housing construction will boost demand in many of these countries. 

Residential buildings constitute the largest market for floor coverings, accounting for 59% of sales in 2011.  Nonresidential buildings made up 35% of demand, with transportation and other markets representing the remaining 6%. Through 2016, the fastest gains in demand are expected in the nonresidential buildings market, primarily due to a rebound in nonresidential construction expenditures in countries recovering from the 2008 global financial crisis and 2009 economic downturn. Demand growth in the transportation equipment and other market will see strong gains due to rising motor vehicle production, while demand in the residential building market will see similar growth because of rebounding housing markets in many countries.

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