Home Sales Up, Remodeling Flat
Recent data shows new-home sales actually increased in the month of September while remodeling remained relatively unchanged in the third quarter. These statistics show a different view of the homebuilding marketplace than in months passed—one that might offer a good sign for homebuilders.
Last week, the U.S. Census Bureau, www.census.gov, Washington, D.C., and the U.S. Dept. of Housing and Urban Development, www.hud.gov, Washington, D.C., announced the latest numbers for new single-family home sales in the month of September.
While the overall rate is still low, the amount of homes sold in the month of September (307,000) was 6.6% above the August rate (288,000). However, this is still 21.5% below the September 2009 estimate of 391,000. For homebuilders, this means the industry still has a long way to go, but the numbers appear to be heading in the right direction.
Bob Jones, chairman, NAHB (National Assn. of Home Builders), www.nahb.org, Washington, D.C., says the fact home sales are heading in the right direction is good news—especially following the slow movement this summer.
“The road to recovery will be a long one, however, and a key hurdle that must be surpassed is the lack of available credit for new-home construction so that builders can meet improving demand for new homes moving forward,” adds Jones.
Beyond the new-home sales, another piece of positive news from the report is the number of newly built, unsold homes on the market fell to a modest level of 205,000 units in September, according to David Crowe, chief economist, NAHB.
“This suggests that builders continue to prudently winnow down their inventories. That said, the concern is that builders’ ongoing difficultly in accessing production credit will keep the razor-thin supply of new home from being replenished as consumer demand revives, thereby hindering the positive momentum.”
While some good news is beginning to surround the new-home market, NAHB’s RMI (Remodeling Market Index) saw little movement in the third quarter.
The RMI remained relatively unchanged from 40.7 in the second quarter to 40.8 in the third quarter. A RMI below 50 indicates more remodelers report market activity is declining than increasing.
According to NAHB, some consumers are still cautious about spending due to the economy, but professional remodelers are concentrating on requests for smaller improvements.