Housing Market Exhibits Resiliency

by WOHe

Housing Market Exhibits Resiliency


Continued low mortgage rates and favorable demographics are being
pegged by analysts as the two primary reasons why the housing and
kitchen/bath markets are apparently remaining resilient in the face
of an economic slowdown that has led to weakness in consumer
confidence, Wall Street and some labor markets. And, housing should
remain healthy as long as consumer confidence doesn’t erode too
much and unemployment doesn’t exceed 5%, most analysts agree.

Remodeling Expenditures
Spending by homeowners on home improvement projects inched up only
modestly during the first quarter of 2001, rising 1% amid signs
that spending has stabilized at levels that should hold for the
next several quarters, according to a quarterly report by Harvard
University’s Joint Center for Housing Studies. The Joint Center’s
latest quarterly Remodeling Activity Indicator (RAI) revealed that
residential remodeling activity managed to increase albeit only a
fraction despite a general slowdown in the U.S. economy during the
first quarter. “Recent cuts in the prime rate have helped make
remodeling projects more affordable at a time when consumer
spending in other sectors is beginning to decline,” said Kermit
Baker, director of the Remodeling Futures Program of the Joint
Center. Baker also noted that lower mortgage rates have contributed
to continued high levels of existing single-family home sales,
adding that “the time of home purchase is a popular time for
remodeling projects.” The Joint Center’s RAI is derived from four
components: manufacturers’ shipments of floor and wall tile
products; retail sales at building materials and supply stores;
sales of existing single-family homes, and the bank prime loan
rate.

Cabinet & Vanity Sales
Sales of kitchen cabinets and bathroom vanities rose 5.1% in March
over those in March of 2000, according to the Kitchen Cabinet
Manufacturers Association. The Reston, VA-based KCMA said last
month that manufacturers participating in the association’s monthly
“Trend of Business” survey reported that year-to-date cabinet sales
through the first three months of 2001 were 4.7% over those of the
same January-March time period last year.

Home Sales
Sales of new single-family homes soared in March to a new annual
high, while sales of existing single-family homes posted similar
impressive gains, amid signs that the worst of the economic
slowdown may be over. New-home sales rose 4.2% in March, to a
record annualized rate of 1.02 million, surpassing the previous
monthly high of 1 million, set in December 2001, according to the
U.S. Commerce Dept. At the same time, the National Association of
Realtors reported that resales rose by 4.8% in March to an annual
rate of 5.44 million, the second-highest monthly total ever.

Appliance Shipments
Domestic shipments of major home appliances continued to slip
downward from last year’s record pace, falling 6.4% in March
compared to the same month in 2000, the Association of Home
Appliance Manufacturers reported. According to the Washington,
DC-based AHAM, appliance year-to-date shipments in the first three
months of 2001 totaling about 15.9 million units were 9.9% below
the pace set in the January-March time period last year. Declines
were posted in virtually all appliance product categories,
including sales of gas ranges (down 12.5%), kitchen cleanup
products (down 8.1%), and food preservation appliances (down 5.5%),
AHAM reported.

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