The economy grew by 211,000 workers in April according to the latest government report on employment.
The number of workers in residential remodeling, who’s data are always a month behind other industries, fell by 3,200 persons in March, for a total of 335,600 workers employed by residential remodeling companies.
Despite the drop, remodeling for homeowner properties grew by 11.8 percent in March for an annual rate of nearly $180 billion.
In fact, as the chart below shows, homeowners have steadily increased their home remodeling spending since April 2016. This bodes well for those member businesses that work primarily with homeowners.
This is turning into another strong year for our industry. The latest report from the Joint Center for Housing Studies at Harvard, which monitors the residential remodeling markets, is calling for nearly 7 percent growth in remodeling activity. Although the Joint Center includes spending on both private residences and rental properties, as well as simple replacements and repairs, the overall strength of the market this year can’t be denied.
If you are interested, you can download the Joint Center’s latest report here. Note that this report tracks quarterly changes in spending and highlights the fact that the spending growth rate has been slowing, although not dramatically.
An increase in the mortgage rate can be a major deterrent to growth in our industry. Although the vast majority of residential remodeling jobs are self-financed, the mortgage rate has a clear impact on home purchasing which often leads to remodeling spending.
The good news is that mortgage rates remained virtually unchanged last week. The 30-year fixed mortgage rate was 4.02 percent last week, a tad lower than the 4.03 percent the previous week.
The chart above shows that, for all practical purposes, mortgage rates have remained favorable to the housing markets for some time now.
Visit the NKBA website to view the latest economic and industry research available to NKBA members.
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.
