While sales at Building Materials Stores fell by 1.7 percent in March, they recovered some of that loss in April. April sales reached $31.2 billion, up 1.2 percent from March’s volume of $30.9 billion.
Except for a pause in July and August, sales of building materials have been on a positive trend for most of the last year as can be seen in the chart above. This trend shows up even more clearly in a comparison of year-to-date sales. Through April 2017, year-to-date sales are 5.9 percent ahead of last year. A bigger gain than that of overall retail sales which are 3.5 percent ahead.
In fact, the only business category performing better than building materials is sales at Gasoline Stations. The latter are running 14.3 percent higher than in 2016, primarily because gasoline prices have increased this year. In contrast, less than half of the sales gain at building materials stores is the result of price increases, the rest is due to more product being sold.
March sales of $1.33 billion at Appliance Stores are 2.4 percent lower than the same month last year. On a month-to-month basis, appliance store sales have been lower every month for the last year.
The chart below displays year-to-date sales at appliance stores for the last six years. 2017 sales are lower than any year going back to 2012. Sales over the four years, from 2013 through 2016, were virtually the same every year, making this year’s decline seems unusual. However, such a loss is not totally unexpected given the competitive thrust coming from home improvement stores and online sellers like Amazon. Also, department stores such as Sears and J. C. Penney took a more aggressive stance to capture a share of appliance sales last year. It’s unclear yet whether they’ve been successful though.
Outside our industry, shipments from U.S. manufacturers fell 0.1 percent in March to $478.8 billion. Year to date through March, shipments are running 4.5 percent ahead of 2016. This is primarily due to a 40.6 percent jump in shipments from petroleum refineries, which account for one of every $12 of U.S. manufacturer shipments.
The largest component of the manufacturing industries is transportation, accounting for over 17 percent of the total value of shipments. However, despite their total contribution, shipments are only 0.1 percent higher than last year. In fact, shipments of automobiles are nearly 20 percent below last year — although light trucks are 5 percent higher.
Back to our industry, we find that mortgage rates rose modestly last week. Increasing by three-hundredths of a point to 4.05 percent, mortgage rates are still near their lowest point in five months as can be seen in the chart below.
Mortgage rates are not an impediment to a continued expansion in the housing or remodeling markets.
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.
