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States, IRS join home builder investigation

BY HBSDEALER Staff

A probe of the hiring and wage practices of some of the nation’s largest home builders has widened to include the Internal Revenue Services and labor officials from nearly a dozen states, according to an article in the Wall Street Journal. 

The investigation, launched in August by the U.S. Department of Labor, is looking at whether home builders and some of the companies they do business with routinely misclassify workers as independent contractors rather than employees. Another area of inquiry is possible violations of labor laws that guarantee minimum wage, overtime pay and benefits.

Labor Secretary Hilda Solis, IRS Commissioner Douglas Shulman, and top labor officials from almost a dozen states have agreed to share information and work together on enforcement efforts. Businesses can then be subject to multiple fines because they can be charged with state and federal violations. States that have agreed to work with the Labor Department so far include Connecticut, Hawaii, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington. Labor officials from New York and Illinois plan to sign up in the near future.

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Builder confidence dips

BY Brae Canlen

Builder confidence in the market for newly built, single-family homes dipped by a single point in September to 14 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index has now held between 13 and 16 for six consecutive months.

"Very little has changed in terms of housing market conditions so far this year," said NAHB chairman Bob Nielsen, a home builder from Reno, Nev. "Builders continue to confront the same challenges in accessing construction credit, obtaining accurate appraisal values for new homes and competing against foreclosed properties that they have seen for some time. Beyond this, both builder and consumer confidence took a hit in recent weeks, with the market disruptions caused by the S&P downgrade and congressional gridlock on the budget deficit."

NAHB chief economist David Crowe said: "The fact that the HMI continues to hover within such a narrow, low range reflects builders’ awareness that many consumers are simply unwilling or unable to move forward with a home purchase in today’s uncertain economic climate. While some bright spots are beginning to emerge in about a dozen select metro areas, the broader picture remains fairly bleak due to the weak economy and job market." 

The NAHB has been conducting its monthly builder confidence survey for more than 20 years, asking builders of single-family homes to rate their sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to gauge traffic of prospective buyers as "high to very high," "average" or "low to very low." The index is then calculated and seasonally adjusted. Any number over 50 indicates that more builders view sales conditions as good than poor.

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

 

A price index of lumber and panels used in actual construction for Sept. 16, 2011

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report. 

Lumber: After a couple of weeks of solid, steady demand, the sales pace in the SPF lumber market subsided. The expiration of September’s futures contract at a level considerably below the 2×4 #2&Btr cash price prompted some ex-pitting. Buildups of dimension lumber at Southern Pine lumber mills were drawn down enough for mills to start testing higher prices early. Enough buyers participated at the higher levels to make quotes $5 to $10 above the prior week’s market levels stick. Balance between supply and demand in the Coastal Species lumber market either improved or was enough in favor of demand to position prices moderately higher. Some producers focused on keeping an order file at arm’s length, while others were more aggressive with raising prices. Buyers of Inland lumber were willing to pay asking prices for good tallies that could ship quickly. Late shipments of carloads were a problem for some buyers who had to look elsewhere for prompt truckloads to fill in. Reports of increased inquiry for Ponderosa Pine 4/4 boards circulated. Ponderosa Pine producers in industrial grades reported a somewhat subdued market. Idaho White Pine sales were steady, with Sterling grade still the bright spot in the market. Eastern White Pine producers reported slow sales for Selects, but better business from box stores for Premium. Western Red Cedar sales into regions that received a reprieve from heat were notable, while other areas where heat persisted were not as active. Mills continued to dial back production, but were optimistic about a slight bump in sales activity in September and maybe October.

Panels: OSB sales volumes seemed to be close to parity with production levels. Mill order files of a week or so were enough to keep quotes unchanged from previous levels. The announcement of mill closures by November from a major plywood producer sent Southern Pine plywood buyers scrambling for coverage. Producers exited the market at various intervals to "catch their breath," while buyers turned to wholesalers for quicker shipping volumes. Western Fir plywood producers reported increased sales activity as the week progressed. Some of the added demand in Southern Pine seeped into the West. Canadian plywood mills carried order files into the week of Oct. 10 for most items. Although prices have not moved much beyond previous sales levels, producers continue to test the waters with higher levels. The month is not over, but expectations for improved market activity in particleboard and MDF in September have not been met. Customers continued to have little problem finding volumes that could ship within a two week period.

For more on RISI, click here.

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