WOLF releases LBM index
Building materials distributor WOLF has announced the creation of a proprietary new metric aimed at measuring how building materials buyers see the near-term future of the residential construction industry.
The WOLF Key Buyer Index (KBI) will gather from a monthly survey of key buyers at independent building materials dealers in the distributor’s 18-state sales territory. The initial survey, from the week of March 23, found that 63.8% of respondents reported their purchasing would increase over the following four weeks, 31.9% said purchasing would remain about the same, and 4.3% said purchasing would decline.
Based on these responses, WOLF calculated the initial Key Buyer Index at 79.8. A WOLF KBI score of 50 reflects a neutral outlook, a score above 50 reflects a positive outlook, and a score below 50 reflects a negative outlook.
CEO Tom Wolf, who created the new industry metric, said that the initial KBI indicates optimism for April among buyers — the group best positioned to offer an informed assessment.
“WOLF maintains ongoing communications and close relationships with hundreds of independent dealers,” Wolf said. “The WOLF KBI captures their near-term sentiment in a statistically significant way that informs dealers, manufacturers, builders, the media and others.”
Wolf noted that the company calculates the KBI using a formula similar to the monthly Purchasing Managers Index (PMI), a highly anticipated monthly indicator developed by the Institute for Supply Management.
WOLF will publish the Key Buyer Index each month in an effort to forecast industry sentiment and identify trends. WOLF will also develop a workable set of statistical adjustments for the index to reflect seasonal, market and product-category variations.
For more information on the WOLF Key Buyer Index, read the detailed explanation on Tom Wolf’s blog or see the latest KBI score at wolfleader.com.
R.A. Yancey Lumber hosts Virginia congressman
In Crozet, Va., Congressman Robert Hurt talked politics and business at the local lumberyard, according to a report by WVIR-TV.
Gas prices were one of the macroeconomic topics of discussion. Hurt, a representative from Virginia’s 5th District, also discussed the case for a “sensible domestic energy policy,” according to WVIR-TV.
The congressman received a tour of the R.A. Yancey yard.
S&P outlook improves for home builders
Credit ratings service Standard & Poor’s (S&P) delivered a guarded but upbeat assessment of U.S. home builders, reporting that “operating conditions … have improved over the past six months, and the sector’s overall credit quality has steadied as a result.” The new report cites a “cautiously stable” outlook for the sector overall, but warns that that trend could backpedal later this year if the baseline residential construction forecast doesn’t materialize.
"We anticipate a modest uptick in new single-family home deliveries this year, which will be guarded but upbeat followed by more robust growth in 2013," said credit analyst Susan Madison. "We also expect the average selling price for new homes to be relatively flat on a year-over-year basis."
Conditions in the U.S. housing sector remain challenging, S&P said, but evidence also points to a strengthening of macroeconomic conditions. The agency noted that any improvements in the housing market will be measured against a very low base, given last year’s numbers. The housing sector is currently giving mixed signals regarding its direction, but Standard & Poor’s believes production levels are improving while pricing is bouncing along the bottom.
S&P currently maintains stable outlooks on 60% of the home-building companies it rates, an indication that ratings should hold steady over the next year under its baseline forecast scenario. In addition, more than half of all home builder ratings reside in the ‘B’ category. However, the ratings on some of the larger home builders could take a hit next year if a firm recovery does not take hold and a more pessimistic scenario comes to pass.
"We do expect the recovery in housing to be slow and uneven, and the performance of individual home builders may not directly correspond with that of the overall sector," Madison said. "For example, builders with well-located and cost-efficient platforms, along with sufficient liquidity to support higher growth trajectories, will most likely improve faster than the others. Comparatively, companies with less liquidity, weaker profitability, more material near-term debt maturities, or those contending with operational missteps, will likely lag the peer group."