Outlook volatile for home improvement spending
After showing signs of recovery, spending on home improvements is expected to remain volatile and weak over the next several quarters, according to a report released today by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. The Leading Indicator of Remodeling Activity (LIRA) projected that annual remodeling spending through the first quarter of 2012 will be down 4%. The Census Bureau’s improvements spending series, to which the LIRA is benchmarked, was recently revised downwards as well.
“The recent slowdown in the economy has caused home improvement spending to weaken again,” said Eric Belsky, managing director of the Joint Center. “Falling consumer confidence levels have undermined interest in discretionary remodeling projects.”
“What looked to be a promising upturn in home improvement spending earlier this year has begun to stall,” added Kermit Baker, director of the Remodeling Futures Program at the Joint Center. “Housing starts, existing-home sales and house prices have all been disappointing lately, which has dimmed prospects for home improvement spending gains this year.”
The Remodeling Futures Program, initiated by the Joint Center for Housing Studies in 1995, is a comprehensive study of the factors influencing the growth and changing characteristics of housing renovation and repair activity in the United States. It seeks to produce a better understanding of the home improvement industry and its relationship to the broader residential construction industry.
Cancellations deflate existing-home sales
Existing-home sales dipped in June by 0.8%, to 4.77 million from 4.81 million in May, according to the National Association of Realtors (NAR). This figure remains 8.8% below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit, the organization noted.
Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable, while the condo sector weakened.
Lawrence Yun, NAR’s chief economist, said home sales had been trending up without the tax stimulus, but an unusual spike in contract cancellations this past month weighed on the market.
“The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16% of NAR members report a sales contract was canceled in June, up from 4% in May, which stands out in contrast with the pattern over the past year.”
Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”
The national median existing-home price for single-family homes was $184,600 in June, up 0.6% from a year ago. The median existing condo price was $182,300 in June, up 1.8% from June 2010.
Distressed homes — foreclosures and short sales generally sold at deep discounts — accounted for 30% of sales in June, compared with 31% in May and 32% in June 2010.
Total housing inventory at the end of June rose 3.3% to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, up from a 9.1-month supply in May.
All-cash transactions accounted for 29% of sales in June; they were 30% in May and 24% in June 2010; investors account for the bulk of cash purchases. First-time buyers purchased 31% of existing homes in June, down from 36% in May; they were 43% in June 2010 when the tax credit was in place.
Regionally, existing-home sales in the Northeast fell 5.2% to an annual pace of 730,000 in June and are 17.0% below June 2010. The median price in the Northeast was $261,000, up 3.1% from a year ago.
Existing-home sales in the Midwest rose 1.0% in June to a pace of 1.04 million but are 14.0% below a year ago. The median price in the Midwest was $147,700, down 5.3% from June 2010.
In the South, existing-home sales increased 0.5% to an annual level of 1.86 million in June but are 5.6% below June 2010. The median price in the South was $159,100, down 0.1% from a year ago.
Existing-home sales in the West declined 1.7% to an annual pace of 1.14 million in June and are 2.6% below a year ago. The median price in the West was $240,400, up 9.5% from June 2010.
Eco Building Products announces licensing agreement for Smart Components
Vista, Calif.-based Eco Building Products (ECOB) has announced an agreement with Trussed Inc. to produce patented Smart Components exclusively with Red Shield protection in Southern California. Under the agreement, ECOB has licensed rights to Trussed’s proprietary design software package and patented technology, and executed a supply agreement.
Smart Components are prefabricated/engineered wall components replacing shear walls for seismic movement in wood-framed buildings. Eco Red Shield protects lumber with chemical solids that control moisture and protect the wood from mold, fire, termites and wood rot.
"I am extremely excited to have Eco Building Products as a licensee of our Smart Components technology,” said Jerry Vulgaris, president of Trussed. “Utilizing their Red Shield-protected lumber to deploy our technology is a perfect complement to our product line."