Spring 2014 — Quad Cities Builders & Remodelers Association
21
Economy
EYE ON THE ECONOMY
February Construction Holds Steady
A
s the unusually cold winter
continued in many parts of the
country, March builder confidence
remained steady. The NAHB/Wells Fargo
Housing Market Index came in at a level
of 47, one point lower than February’s 46.
Ongoing weather challenges and increasing
concern among builders about supply-chain
issues have held builder confidence down in
recent months.
Census reported housing construction starts
were virtually unchanged from slightly
upwardly revised January figures. Total
housing starts were 907,000 on a seasonally
adjusted annual basis, nearly identical to
909,000 in January. Single-family starts
were 583,000, up 2,000 from January.
Regionally, single-family starts remained
well below 2013 totals in the Northeast and
Midwest, while above last year’s in the South
and West. The regional differences match
the location of the worst below-average
temperatures and above-average snow falls
and support the explanation of a weather
effect rather than a shift in the housing market.
The pace of multifamily starts came in at a
324,000 annualized rate in February, down
4,000 from January but above the one-
year average of 313,000. Other multifamily
market data indicate that this sector
continues to have room to grow. According
to Consumer Price Index data, real,
inflation adjusted rents have increased 1.2%
from last year. And three-month apartment
absorption for for-sale and for-lease unit
rates remain near post-recession highs.
Local conditions remain positive for housing
across the country. The March NAHB/
First American Leading Markets (LMI)
Index remained unchanged in March at .87
from February, but the number of markets
considered at or above their last normal
periods increased from 58 to 59 from February
to March and from 47 to 59 year over year. In
addition, the number of markets doing better
than the national market rose from 147 to 152
month over month.
The LMI measures proximity to a normal
market by comparing the last 12 months
of activity in three indicators (single-family
permits, home prices and employment
levels). The gradual, persistent increase in
the number of markets improving is further
indication of the slow but steady process
of resolving the economic and housing
problems that developed during the
Great Recession.
NAHB survey data suggest that in addition
to the weather, lots, labor and building
material costs remain top industry
challenges. For example, recent Bureau
of Labor Statistics data indicate that there
were 156,000 unfilled construction sector
positions in January of 2014, the second
highest count since May 2008. Overall
employment growth remains lackluster,
with the economy creating only 175,000
jobs in February after disappointing
reports in January and December. And
recent Producer Price Index data show
that in February softwood lumber prices
rose 2.2%, OSB prices declined 0.7%, and
gypsum prices rose 4.1%.
In housing market analysis news, NAHB
recently published information regarding
housing preference among various ethnic
groups. The study examines breakdowns
of preferred housing items among
these groups, as well demographic and
income differences.
In addition, NAHB economists also examined
local variations of homeownership rates
and counts of owner-occupied homes. This
review used data from the 2012 American
Community Survey.
Finally, with respect to housing policy,
NAHB’s Economics group published
three summaries of key advocacy efforts
underway on behalf of the home building
sector: worker shortages, housing finance
reform, and the prospect for comprehensive
tax reform. Each one analyzes the data and
draws economic conclusions in connection
with ongoing efforts by NAHB and
its membership.
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