Looking for answers about where the housing industry is headed over the next 12 months? You’ll find a lot of quotes from housing analysts that include phrases like “depending on jobs,” echoing Fed Chairman Ben Bernanke and his description in late July of the economic outlook as “unusually uncertain.” The consensus seems to be, however, that a slow recovery is imminent. Here’s an overview of the main industry indicators, as of the end of August.
Starts and permits. The Commerce Department reported in August that starts of single-family homes in July were at a seasonally adjusted annual rate of 432,000, down 13.6 percent from the previous year. Permit numbers weren’t any better, at 416,000, down 13.2 percent from a year ago and the lowest they’ve been since April 2009. In his response to these numbers, National Association of Home Builders Chief Economist David Crowe said, “Right now the housing market is essentially in a holding pattern. As our latest member surveys have indicated, builders are seeing greater hesitancy among potential home buyers who are uncertain about what’s in store for the economy and jobs going forward. That said, favorable home buying conditions including historically low mortgage rates and low house prices should help spur additional demand as the job market gradually improves later this year.”
Home inventory. In July, existing single-family home inventory was at 3,350,000 homes, an 11.9-month supply at the current sales rate, according to the National Association of Realtors — for context, a market is considered healthy when supply is six months or less. Inventory of new single-family homes continued its almost three-year decline in July, to 210,000 homes, a level not seen since 1968. Still, the current low sales rate means this represents a supply of 9.1 months.
Financing. The August Economic Outlook from Fannie Mae’s Economics & Mortgage Market Analysis Group points out a number of weaknesses in the housing market, including elevated vacancy rates and anemic sales, and predicts continued declines in housing for the third quarter of this year and “a modest rebound in activity in the fourth quarter, assuming continued gradual healing of the labor market.” The authors predict that the 30-year fixed mortgage rate will hold at around 4.5 percent through 2010, which will benefit “borrowers who are in a position to refinance, have a good credit history, and ample home equity,” but won’t prompt a “refinancing boom.”
Remodeler confidence. The most recent NAHB Remodeling Market Index (RMI) — based on a quarterly survey of remodelers — showed continued weakness in the remodeling market. In a statement about the index, NAHB’s David Crowe noted that “professional remodelers are taking on smaller projects and working to find consumers willing to spend money despite the economic uncertainty.” However, he also said he expected “the first stages of recovery emerging by the end of the year, followed by a more robust recovery beginning early next year.” The last time the RMI was in positive territory was in 2005.
Remodeling indicator. The Leading Indicator of Remodeling Activity (LIRA), from the Remodeling Futures Program at the Joint Center for Housing Studies (JCHS) of Harvard University, estimates home-improvement spending for the current quarter and following three quarters. The latest LIRA, released July 15, shows remodeling spending ticking up in the coming months, and the rate of growth in spending increasing to 12.4 percent in early 2011. In his commentary, Eric S. Belsky, managing director of the JCHS, said, “Absent a reversal of recent economic progress, there should be a healthy upturn in home improvement activity by year-end and into the next year.” Kermit Baker, director of the Remodeling Futures Program at the JCHS, offered additional encouraging words: “The recovery in home improvement activity appears to be moving beyond simple replacement projects and energy retrofits to broader remodels and upgrades.”
All About Wood
Ever wonder about strength properties of different species of wood or withdrawal resistance of different types of nails in green versus seasoned wood or maybe how the smoothness of a bolt hole affects bearing strength? Information on these and numerous other topics related to wood can be found in the Centennial Edition of Wood Handbook: Wood as an Engineering Material, recently published by the USDA Forest Service Forest Products Laboratory.
Individual chapters can be downloaded for free; go to www.fpl.fs.fed.us and click on the image of the book cover under “Popular Items,” which will bring you to a table of contents (if you prefer to type in a long website address, you can just go straight to www.fpl.fs.fed.us/products/publications/several_pubs.php?grouping_id=100&header_id=p).
For each chapter, clicking on [Details] brings up a comprehensive description of the information covered. To download a PDF, simply select “View PDF.” I had a little trouble downloading a few of the chapters — the files stopped downloading midway — but I just closed the window and tried again and was eventually successful.
Some examples of chapter topics include fasteners, adhesives, finishes, mechanical properties of wood-based composite materials, preservatives, and structural analysis equations. The technical level of the chapters varies widely, but even the most technical material has interesting pieces of information understandable to the nonengineer and relevant to building most wood structures.
The preservatives ACQ and MCQ were comparably effective at protecting wood against rot and termites in recent testing conducted by Australia’s national science agency, the Commonwealth Scientific and Industrial Research Organisation. The results were summarized in the paper “Trials on the Efficacy of Micronized Copper
in Australia,” by L.J. Cookson, et al., which was published in the Forest Products Journal (www.forestprod.org) earlier this year (vol. 60, no.1). Both preservatives are copper based, but in ACQ (alkaline copper quartenary), the copper is dissolved, whereas in MCQ (micronized copper quartenary), the copper is in the form of suspended, larger particles to make it less corrosive to metal hardware. The testing comprised three trials in which samples of Australian radiata pine and eucalyptus were treated with ACQ and MCQ. In one trial, the treated wood was exposed to lab-grown rot fungi. In a second test, treated specimens of the two wood species were exposed outdoors and above ground to termite activity. The third test was an in-ground field trial, in which treated stakes were exposed to rot fungi and termites in the Innisfail rainforest area in Australia.
NAHB is challenging the EPA over the agency’s removal of the “opt-out provision” from the Lead: Renovation, Repair and Painting Rule (RRP). That provision had let consumers in homes where no children under six or pregnant women resided to allow contractors to forgo the RRP requirements. In July, the home builder’s group — along with the Hearth, Patio & Barbecue Association, the National Lumber and Building Material Dealers Association, and the Window and Door Manufacturers Association — filed a petition for review in the U.S. Court of Appeals. The groups claim that the EPA has no scientific evidence showing that removing the opt-out provision will help protect the populations most at risk from exposure to lead paint. Proponents of removing the provision had argued that pregnant women or children under six who visit or move in after renovations are done could be exposed to dangerous levels of lead if RRP requirements were not followed.
Milwaukee Electric Tool Corp. announced in July that it was replacing its V28 battery with its new M28 lithium-ion battery. V28 tools are compatible with the new M28 batteries, and new M28 tools will be compatible with V28 batteries. Note that though the M28 charger can charge V28 batteries, the old V18-28 charger can’t charge M28 batteries.
The “green verification” arm of the International Code Council Evaluation Service issued its first report on decking products, in July. The ICC-ES Sustainable Attributes Verification and Evaluation program (SAVE) creates a Verification of Attributes Report (VAR) to confirm a manufacturer’s claims about one or more environmental aspects of its products. In this case, VAR-1011 was issued to Trex to verify the recycled content and the biobased content in its wood-composite products. The report also includes tables detailing the products’ compliance with various green building standards. Go to saveprogram.icc-es.org for more information and to read the actual report.