Varied Employment News
Last month’s employment gain of 103,000 new jobs was lower than expected and, in fact, the lowest in the last six months. Several key sectors saw employment gains, even though an important one for the kitchen and bath segment — construction — actually saw a decline in employment.
It should be noted that most of the areas with employment gains are also those with highest earnings, with the exception of retail trade and leisure & hospitality, whose average hourly earnings are significantly lower than the national average of all workers.
Employment in Remodeling Businesses Rises
Home remodeling continues to increase, as evidenced by the increases in employment at remodeling firms. In February, the number of remodeling employees reached another historical high of 336,300 workers, up by 1,200 from the previous month.
But the amount of funds spent by homeowners for remodeling has not changed much over the last year. Although February spending rose 1.9% to $187.8 billion (annualized), it is only 1.4% ahead of the same month last year, when homeowners were spending at a rate of $185.1 billion.
Where Are New Multifamily Houses Built?
As previously stated, data on multifamily housing starts reflects the number of housing units within buildings, rather than the number of buildings themselves. The table below displays the relationship between housing units and buildings or structures.
The table reveals that the 411,200 multifamily houses were built within 15,000 buildings, for an average of 27 housing units per building. Note also that the 817,300 single-family houses are not all built as detached units. This is because a number of them are built as townhouses, and thus are part of a single structure even though they are considered single-family houses.
The map below displays the geographic distribution of multifamily housing units across the 50 states. The states shaded in dark orange are those with the greatest number of multifamily housing permits. We can readily see that many of them are states with large metropolitan areas that have a central city with dense population. These naturally lead to a need for multifamily housing units, such as apartments or condominiums.
We see in this group states such as New York (the New York City metro area), Texas (Dallas and Austin), California (Los Angeles, San Francisco and San Diego) and Illinois (Chicago).
But there’s also heavy need for multifamily housing in areas that have large number of second homes or time-share units, like North Carolina and Colorado.
Only five of the top 10 leading states in multifamily construction also lead in the construction of single-family units: Florida, North Carolina, Texas, Colorado and California.
Mortgage Rates Ease Down Again
Mortgage rates dipped further last week to 4.4%. This drop brings rates down to the level of two months ago, cancelling the modest increases seen in the interim.
Regardless of the changes in mortgage rates, they impact new housing construction more severely than remodeling. This is because, as noted previously, the vast majority of home improvement spending is financed by homeowners via their own savings. In contrast, most house transactions, whether new homes or sales of existing homes, are financed by borrowing funds. These transactions are more sensitive to mortgage rate fluctuations.
Manuel Gutierrez, Consulting Economist to NKBA
Explanation of NKBA’s Economic Indicators Dashboard
The dashboard displays the latest value of each economic indicator with a colored triangle that highlights visually the recent trend for each of the drivers. “Green” is a positive signal, indicating that the latest value is improving; “Yellow,” as it’s commonly understood, denotes caution because the variable may be changing direction; “Red” indicates that the variable in question is declining, both in its current value and in relation to the recent past.
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. This 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 are sales of new homes priced at $750,000 and higher. 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 total sales of building materials, regardless of whether consumers or contractors purchased them. However, we should caution that the data also includes 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, for instance.
We hope 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.
