Building Materials hit highest monthly sales ever, as new housing skyrockets and stay at home orders appear to increase renovations
By Manuel Gutierrez, NKBA Consulting Economist
Total retail sales, including expenditures at restaurants and bars, rose by a robust 1.9% in September, reaching $549 billion for the month. This marks the fifth consecutive month of increases, with total sales recovering to near pre-pandemic levels. For perspective, during the initial pandemic shutdown in March and April, retail sales had dropped by 20% vs. pre-Covid.
Despite the strong rebound over the last five months, year-to-date sales still trail last year by one percent. For the first eight months of 2019 total sales were $4.64 trillion, slightly above the latest figure of $4.60 trillion.
On an annual basis, sales in September were 5.4% ahead of the same month last year.
Sales at virtually all retail stores increased in September. The only exception is for Electronics and Appliances stores, whose combined sales fell by 1.6% from August to September.
Sales at Department Stores rose by nearly ten percent in September (9.7%). This was somewhat surprising given the pressure these stores and been under and the recent and ongoing high-profile closings. Despite this very recent gain though, sales today are just half their peak levels of 20 years ago, when they stood at $19.9 billion in January 2001.
The sales volume at both Electronics and Appliances stores are also 20% below their peak for this century, which occurred in 2007. Sales in these dedicated stores have lost customers to major home center chains or to the internet, with companies such as Home Depot or Amazon grabbing market share.
Examining businesses closer to home, Building Materials stores rose 0.6% to $37.8 billion in September. This marks their highest ever monthly sales, undoubtedly reflecting the boom in new housing construction as well as the strong homeowners’ remodeling market.
In fact, as the chart below strongly suggests, the “stay at home” mandate prevalent throughout most of the nation led to a sharp jump in sales of building materials, as seen by the rise beginning in April of this year.
Sales for the majority of product categories, with the notable exception of Food and Building Materials, fell sharply in March and April, only to rebound to near their pre-pandemic levels. Building Materials fell a modest 2.2% in April, then proceeded to rise by a sharp 12% in May, and has maintained higher sales levels through September.