DECKING NEWS
LP Warns of Deteriorating Decking
Louisiana-Pacific Corp. announced in August that some WeatherBest, Veranda, and ABTCo decking and railing products have shown signs of premature deterioration. Only products that were manufactured in Meridian, Idaho, before November 2007 and sold after January 1, 2005, are affected by the company’s advisory.
WeatherBest products manufactured after Fiber Composites acquired the WeatherBest brand and the Meridian manufacturing facility in November 2007 are not subject to the LP advisory. According to a statement by Fiber Composites, it reformulated the composition of WeatherBest decking at the time of the acquisition. An easy way to tell if a WeatherBest board was made by Fiber Composites is it will have either a kerf or a groove cut into the side, whereas the LP board’s profile is smooth.
Affected Veranda and ABTCo products were sold in the western U.S. at The Home Depot, and affected WeatherBest products were sold nationwide through building-product distributors and dealers. LP recommends that customers who have decks made with these products register at the Web site deckingnotice.com or call 888/325-1184, even if they see no signs of cracking or chipping. Builders with a supply of this decking should contact LP to arrange for the return of the material. — Laurie Elden
How Low Will the Housing Market Go?
The best that can be said of the current slump in housing is that it will hit bottom eventually, though most analysts agree it hasn’t yet.
All the latest housing numbers from the U.S. Census Bureau are down. The seasonally adjusted annual rate for single-family housing starts in July — 641,000 — showed a 30 percent drop from the year before and was the lowest it’s been since the early 1990s. The annual rate of sales of new single-family houses in July was 515,000, which is 35.3 percent lower than in July 2007. Based on that rate, there was a 10.1-month supply of unsold new homes at the end of July; generally, a five- to six-month supply signals a healthy market. Prices also were down in most of the country: The national median sales price of a new home sold in July was $230,700, down from $246,200 in July 2007.
Where home building leads, the remodeling market follows, according to researchers at the Joint Center for Housing Studies (JCHS) at Harvard University. As Nicholas P. Retsinas, director of the center, said in a recent press release, “The slumping economy and struggling housing sector continues to drag down spending on home improvements. Households are reluctant to undertake major improvements in the context of falling prices. Weak home sales and a growing inventory of unsold homes have discouraged upper-end remodeling activity in many areas.” For context, in July the national median price of an existing single-family-home was $210,900, down 7.7 percent from July 2007, according to the National Association of Realtors (NAR), and inventory stood at a 10.6-month supply.
Not surprisingly, the Remodeling Market Index of the National Association of Home Builders (NAHB) for the second quarter showed that more than half of remodelers polled had a negative view of the market. Activity was down in major projects and in maintenance and repair and up in small projects. Regionally, the Midwest was the only area where more than half of remodelers believed conditions had improved since the previous quarter.
Pockets of Good News
In a report released in August by the NAR, not all the numbers were gloomy: The annual sales rate of existing single- family homes in the West was up in July from a year earlier; according to NAR economist Lawrence Yun, sales have also improved in several Florida and California markets.
Builder confidence was still low in August and unchanged from July, as measured by the NAHB/Wells Fargo Housing Market Index (HMI); however, builders’ views of both current sales conditions and future sales improved slightly, possibly “an indication that we are nearing the bottom of the long downswing in new-home sales,” says David Seiders, an economist at NAHB, in a press release.
The tax credit for first-time home buyers has given hope to some in the industry. It’s actually a zero-interest loan rather than a traditional tax credit, because it must be repaid. Still, the amount of interest a buyer will save is a substantial incentive to take advantage of the program, which is available for the purchase of a new or existing home through June 30, 2009 (federal housingtaxcredit.com). Sandy Dunn, president of NAHB, notes that builders “are optimistic that the tax credit will give those buyers who’ve been sitting on the fence the reason they need to jump back into the market.”
Predictions
“Our current forecast shows stabilization of [new-home] sales during the second half of this year, followed by solid recovery in 2009 and beyond,” NAHB economist David Seiders says in a statement released in late August. Harvard’s JCHS Leading Indicator of Remodeling Activity predicts that home improvement spending will be down 11.1 percent over the previous year by the first quarter of 2009. After that, Seiders notes in Nation’s Building News Online, “We expect remodeling to remain generally flat in 2009, followed by strong growth due to home maintenance needs.”
A less definitive prediction was offered by former Federal Reserve chair Alan Greenspan in an interview with the Wall Street Journal in August: “Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009.’’ However, he went on to say, “Prices could continue to drift lower through 2009 and beyond.’’ — L. E.
What goes up doesn’t always come down, at least when you’re talking about gas prices. Regular gas will continue to average more than $4 a gallon until late 2009, according to the U.S. Department of Energy. In the report “Short-Term Energy Outlook” released on July 8, the DOE projects regular gas will cost an average of $3.84 a gallon in 2008, and an average of $4.06 in 2009. Average prices for diesel are projected to be $4.35 a gallon in 2008 and $4.48 in 2009. |
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