Ogden, Utah, leads rise in housing affordability
Although home prices are starting to inch up in metro areas around the country, lower interest rates continue to make homes more affordable to median-income families, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).
Nationwide, 74.1% of all homes sold in the third quarter 2012 were affordable to families earning the U.S. median income of $65,000, the HOI calculated. This was up slightly from the 73.8% of homes sold that were affordable to median-income earners in the second quarter.
"The latest housing affordability data is good news on two fronts, because it shows that the share of homes affordable to median-income earners has risen even as home prices have continued to gradually recover from their recession lows," said NAHB chairman Barry Rutenberg, a home builder from Gainesville, Fla. "This is primarily due to the fact that mortgage rates are now lower than we’ve seen them since the HOI was initiated more than a decade ago. That said, given today’s overly tight lending conditions, we know that it remains very difficult for potential buyers to qualify for and obtain those great rates."
NAHB chief economist David Crowe noted that the median price of all new and existing homes sold in the third quarter was $189,000, up from $176,000 in last year’s third quarter. “[It’s] the strongest number we’ve seen since the final three months of 2008," Crowe said. "But at the same time, mortgage rates were at their lowest levels in decades, which kept homes quite affordable. Clearly, for families who qualify for a mortgage at such favorable terms, the outlook is brightening — but being able to afford a home and getting approved for a mortgage are still two different things in the current marketplace."
Topping the affordability list for the first time in the HOI’s history, Ogden-Clearfield, Utah, was named the most affordable major housing market in the country in the third quarter. Between July and September of this year, 93.2% of all new and existing homes sold were affordable to families earning the area’s median household income of $71,500.
Also ranking among the most affordable major housing markets, in respective order, were Youngstown-Warren-Boardman, Ohio-Pa; Indianapolis-Carmel, Ind.; Lakeland-Winter Haven, Fla.; and Toledo, Ohio.
Among smaller housing markets, Fairbanks, Alaska, retained its standing at the top of the affordability chart with 99.4% of all homes sold there in the third quarter being affordable to families earning the area’s median income of $92,900. Other smaller housing markets at the top of the index included Mansfield and Lima, Ohio; Wheeling, W.Va.-Ohio; and Kokomo, Ind.
Meanwhile, New York-White Plains-Wayne, N.Y.-N.J. retained the title of the least affordable major housing market in the country for an 18th consecutive quarter, with just 28.5% of homes sold there being affordable to families earning the area’s median income of $68,300.
Other major metros at the bottom of the affordability chart included perennial entrants San Francisco-San Mateo-Redwood City, Santa Ana-Anaheim-Irvine and Los Angeles-Long Beach-Glendale, Calif., as well as Bridgeport-Stamford-Norwalk, Conn., in that order.
The least affordable small housing market in the third quarter was Santa Cruz-Watsonville, Calif., with just 44.4% of homes sold being within reach of families earning the median income of $87,000. Other small metros at the bottom of the list included Ocean City, N.J.; San Luis Obispo-Paso Robles, Calif.; Laredo, Texas; and Santa Barbara-Santa Maria-Goleta, Calif., respectively.
Distribution America, PRO Group hold joint conference
Distribution America and the PRO Group met for their Executive Planning Conference Nov. 12 to 14 in Tucson, Ariz., to discuss new product lines, program launches and business opportunities. More than 400 distributors and manufacturers were in attendance, and almost 2,800 scheduled meetings were held between buyers and sellers.
Among the participants were Todd Hermon, national accounts manager for Waukegan, Ill.-based Coleman Cable, who focused on potential growth opportunities for his consumer electrical product company. "We are seeing a bit of a rebound especially in regard to contractor-related business,” Hermon said. “We talk about ways to grow the business, whether we can add new items and how we can help each other."
Doyle Wallace, president & CEO for Morristown, Tenn.-based Wallace Hardware Co., said: "It is more important today than ever before that distributors do hands-on planning each year with our major vendors. More than discussing the basics, like history and promotions, we talk about how we are going to grow our business. We are also looking to partner with new vendors that complement our marketing strategy in our territory."
The National Hardware Show sponsored a special reception to promote the farm and ranch category, which will be prominent at the May 2013 National Hardware Show in Las Vegas. Sonya Ruff Jarvis, VP attendee programs for Reed Exhibitions, said there will be a dedicated area at the National Hardware Show for farm and ranch manufacturers. “This entry into showcasing a new product category on the show floor reflects what we’re hearing out in the marketplace from retailers and distributors that this category is a growing segment that they are turning to for growth,” Ruff Jarvis said.
Steve Draeger, president of Plymouth, Minn.-based United Hardware Distributing Co., said the conference provides an opportunity to identify vendors who truly want to work with the wholesalers and grow their business profitably for the long term. “These are manufacturers who will work to make it happen rather than sit back and hope it happens,” Draeger said. He added that a benefit of the conference is interacting with top-level representatives from manufacturer companies. “Our team’s task is rather simple: They are to grow our business and relationship with vendors who are interested in a three-way win: retailer, wholesaler and vendor.”
Don Hasson, CEO of Knoxville, Tenn.-based House-Hasson Hardware Co., said the conference is one of the only events in the industry where manufacturer executives and distributor executives can network with each other. "Our attitude regarding the hardware industry is always positive, regardless of the economy," he said. "It is important to us to have a person-to-person relationship with our key vendors.”
October retail sales generally hold steady
Advance estimates of U.S. retail and food services sales for October were $411.6 billion, down 0.3% from the previous month, but up 3.8% compared with the same month last year.
The figures, released Wednesday morning, are adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.
October sales among building material and garden equipment and supplies dealers, businesses in the NAICS 444 group, were $24.318 billion, down from $24.798 in September, but up from $24.142 in October of 2011.
Retail trade sales were down 0.3% from September 2012, but 3.8% above last year.