Sales at Building Material & Supply Dealers have been steadily increasing since the first half of last year and rose another 366 million to $27.2 billion in February. This marks a 1.4 percent gain over January.
The advanced sales figure for March, however, which includes stores that also sell garden equipment, fell by 1.5 percent compared to February. This decline may indicate a softening in the construction markets. When the data excluding garden equipment are released next month, we’ll be able to determine whether this decline is across all materials or just garden equipment.
Although the sales data are aggregate, and we can’t discern whether some or all construction segments are driving the sales growth, we know that single family housing has been gaining over the last six months within the residential sector. During that period, starts of single family houses have been running nearly 10 percent above the rate maintained in the preceding six-month period (i.e., April through September 2016). In contrast, construction of multifamily housing units has remained virtually unchanged over the last year.
The mortgage rate continues to fall. From an average of 4.30 percent in March, mortgage rates have fallen steadily by 22 basis points to last week’s 4.08 percent. Even though declining mortgage rates are good news for borrowers, the recent declines reflect poor demand for credit. That is, consumers are less willing to borrow mortgage funds.
Sales at Appliance Stores continue to fall. In February, the latest data point available, sales of $1.167 billion were 11.7 percent below the prior year.
But consumers remain confident in the U.S. economy’s prospects. In fact, they appear to be more optimistic as time goes by. The University of Michigan’s Consumer Sentiment Index rose in April to 98.0. Though preliminary, the April figure indicates that American consumers are more bullish about the economy than at any time over the last 17 years, as evidence in the chart below.
The Conference Board has a similar index to measure consumers’ feelings about their financial situation and economic outlook called the Index of Consumer Confidence. For March, the index rose sharply to 125.6, up from 116.1.
Manuel Gutierrez, Consulting Economist to NKBA, economist @nkba.org
Explanation of NKBA’s Economic Indicators Dashboard
The dashboard displays the latest value of each economic indicator. Note that all the data, except for “mortgage rate” and “appliance store sales” are seasonally adjusted and are represented at annual rates.
Remodeling Expenditures. This is the amount of money spent on home improvement projects during the month in question. It covers all work done for privately-owned homes (excludes rentals, etc.). The data are in billions of dollars and are issued monthly by the U.S. Department of Commerce.
Single Family Starts. It is the number of single family houses for which construction was started in the given month. The data are in thousands of houses and are issued monthly by the U.S. Department of Commerce.
Existing Home Sales. These data are issued monthly by the National Association of Realtors, and capture the number of existing homes that were sold in the previous month.
High-End Home Sales. This series represents sales of new homes priced at $750,000 and over. The data are released quarterly by the U.S. Department of Commerce, and are not seasonally adjusted. Thus, a valid comparison is made to the same quarter of prior year.
Mortgage Rate. We have chosen the rate on 30-year conventional loans that is issued by the Federal Home Loan Mortgage Corporation (known popularly as Freddie Mac.) Although there are a large number of mortgage instruments available to consumers, this one is still the most commonly used.
Employees in Residential Remodeling. This indicator denotes the number of individuals employed in construction firms that do mostly residential remodeling work.
Building Materials Sales. These data, released monthly by the Department of Commerce, capture the total sales of building materials, regardless of whether consumers or contractors purchased them. However, we should caution that the data also include sales to projects other than residential houses.
Appliance Store Sales. This driver captures the monthly sales of stores that sell mostly household appliances; the data are stated at an annual rate. We should not confuse this driver with total appliance sales, since they are sold by other types of stores such as Home Centers.
We hope that you find this dashboard useful as a general guide to the state of our industry. Please contact us if you would like to see further detail.
