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Construction Trends

101 Housing Markets on Improving List in April


The list of housing markets showing measurable improvement expanded slightly to include 101 metropolitan areas in April, according to the National Association of Home Builders/First American Improving Markets Index (IMI), released today. Thirty-five states (including the District of Columbia) are now represented by at least one market on the list.




The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. The 101 markets on the April IMI represent a net gain of two from March, with 13 metros being added and 11 markets slipping from the list while 88 markets retained their places on it. Among the new entrants, areas as diverse as Rome, Ga.; Coeur d’Alene, Idaho; Greenville, N.C.; Brownsville, Texas; St. George, Utah; and Huntington, W.Va., are now represented on the IMI.




“While housing markets across the country continue to struggle under the weight of overly tight lending conditions and other challenges, the April IMI indicates that at least 101 individual metros are showing measurable and consistent signs that they are headed in the right direction,” said NAHB Chairman Barry Rutenberg. “A total of 35 states are now represented on the list, with 10 states having four or more entries. This positive news is in line with what our builder members have observed regarding firming conditions and improved buyer interest in certain locations.”




“After five consecutive months of gains, the IMI recently began to plateau, with many markets holding steady and a few experiencing the ups and downs that are typical in a choppy recovery,” observed NAHB Chief Economist David Crowe. “The IMI is designed to highlight markets that are showing consistent improvement, and those markets that have registered the smallest gains are more susceptible to dropping off the list due to a minor setback in prices, permits or employment,” he explained. At the same time, “as stronger markets approach stability, it will get harder for them to keep charting improvement, which will also limit the expansion of the IMI.”




“The fact that the number and geographic distribution of improving housing markets continued to expand beyond the 100 mark in April bodes well for the start of the spring home buying season, and should be an encouraging sign for those who are considering a home purchase,” added Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.




The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three areas for at least six months following their respective troughs before being included on the improving markets list.




A complete list of all 101 metropolitan areas currently on the IMI and separate breakouts of metros newly added to or dropped from the list in April is available at www.nahb.org/imi.
Builder Confidence Unchanged in March
Builder confidence in the market for newly built, single-family homes was unchanged in March from a revised level of 28 on the National Association of Home Builders/Wells Fargo Housing Market Index, released March 19. This means that following five consecutive months of gains, the HMI is now holding at its highest level since June 2007.




“While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving,” said Barry Rutenberg, chairman of the National Association of Home Builders and a home builder from Gainesville, Fla. “This is demonstrated by the fact that the HMI component measuring builder expectations continued climbing for a sixth straight month in March, to its highest level in more than four years.”




“Builder confidence is now twice as strong as it was six months ago, and the West was the only region to experience a decline this month following an unusual spike in February,” observed NAHB Chief Economist David Crowe. “That said, many of our members continue to cite obstacles on the road to recovery, including persistently tight builder and buyer credit and the ongoing inventory of distressed properties in some markets.”




Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.




While the HMI component gauging current sales conditions declined one point to 29 in March, the component gauging sales expectations in the next six months gained two points to 36 and the component gauging traffic of prospective buyers held unchanged at 22.




Regionally in March, the HMI gained five points to 25 in the Northeast, two points to 32 in the Midwest and two points to 27 in the South, but fell 10 points in the West following a 22-point gain in the previous month.



February Construction Starts Fall 7 Percent


At a seasonally adjusted annual rate of $376.0 billion, new construction starts in February dropped 7 percent from the previous month.





McGraw-Hill Construction, a division of The McGraw-Hill Companies, announced that while the nonresidential building sector registered diminished activity, residential building in February was able to register modest growth.




For the first two months of 2012, total construction starts on an unadjusted basis came in at $52.9 billion, down 14 percent from a year ago. For the 12 months ending February 2012 versus the 12 months ending February 2011, which lessens the volatility present in year-to-date comparisons of just two months, total construction starts were down 2 percent.




The February statistics lowered the Dodge Index to 80 (2000=100), compared to 85 in January. For 2011 as a whole, the Dodge Index averaged 91.




Nonresidential building, at $127.6 billion (annual rate), dropped 7 percent in February. A large part of the shortfall came from a 22 percent slide for educational buildings, continuing the descent that has been under way for the past three years. Public buildings weakened further in February, plummeting 46 percent, and the healthcare facilities category decreased 9 percent. The other institutional categories reported gains in February, including a 22 percent increase for amusement-related work, and transportation terminal work advanced 45 percent.




On the commercial side, warehouses and hotels retreated in February, falling 8 percent and 47 percent respectively. Office construction improved 11 percent, reflecting such projects as a $106 million Social Security Administration building in Baltimore, a $75 million renovation to the U.S. Department of Commerce building in Washington, D.C., and a $65 million corporate headquarters in Malvern, Pa. Store construction in February was able to advance 35 percent from a weak January, aided by the start of a $300 million observation restaurant and entertainment venue in Las Vegas. The manufacturing plant category increased 9 percent, boosted by a $99 million upgrade to a solar panel manufacturing plant in Portland, Ore.





Residential building in February grew 3 percent to $140.6 billion (annual rate). Most of the upward push came from multifamily housing, which rebounded 10 percent after sliding back in January. Large multifamily projects reported as February starts included a $164 million condominium complex in Santa Monica, Calif. and a $57 million apartment building in Gambrills, Md.




Single-family housing, up 1 percent, essentially held steady in February, due to a mixed performance by region: the South Atlantic, up 8 percent; the Midwest, up 5 percent; the Northeast, down 1 percent; the West, down 2 percent; and the South Central, down 3 percent.




The 14 percent decline reported for total construction on an unadjusted basis during the first two months of 2012 compared to 2011 was the result of a mixed performance by major sector. Nonresidential building dropped 17 percent year-to-date, reflecting this pattern: commercial building, down 9 percent; institutional building, down 15 percent; and manufacturing building, down 54 percent.




Residential building climbed 20 percent year-to-date, with multifamily housing up 23 percent while single-family housing grew 20 percent from its very weak amount at the start of last year.




By region, total construction starts in the first two months of 2012 showed an increase for one region, with the South Atlantic climbing 7 percent, while declines were registered by the other four regions: the Midwest, down 2 percent; the West, down 11 percent; the Northeast, down 21 percent; and the South Central, down 32 percent.




The 2 percent drop for total construction on a 12-month moving total basis, meaning the 12 months ending February 2012 versus the 12 months ending February 2011, was the result of this behavior by major sector: nonresidential building, down 3 percent; residential building, up 8 percent; and nonbuilding construction, down 10 percent. By geography, the 12 months ending February 2012 showed the following performance for total construction: the South Atlantic, up 13 percent; the West, up 3 percent; the Northeast and Midwest, each down 8 percent; and the South Central, down 12 percent.




New-Home Sales Decline 1.6 Percent in February


Sales of newly built, single-family homes slowed 1.6 percent to a seasonally adjusted annual rate of 313,000 units in February, according to data jointly released March 23 by HUD and the U.S. Commerce Department.




“To some extent, we believe that exceptionally good weather conditions in December helped pull some home sales forward that would otherwise have occurred in January and February, which partially accounts for the declines we’ve seen at the beginning of this year,” said NAHB Chief Economist David Crowe. “However, the February sales rate is still 11.4 percent above its year-ago level, and the quarterly average sales pace is at a two-year high. Meanwhile, the inventory of new homes for sale remains at a record low, in part because of the lack of available financing for new-home production.”




Crowe also noted that the sales report indicated greater buying activity in the above-$200,000 range in February. This suggests that those who have higher incomes and can more easily qualify for a mortgage are the ones who are moving forward with a home purchase, while first-timers who are looking in the lower price ranges may be having a tougher time getting qualified, he said.




Regionally, new-home sales increased 14.3 percent in the Northeast and 8.0 percent in the West, but declined 2.4 percent in the Midwest and 7.2 percent in the South in February. Meanwhile, the inventory of new homes for sale held unchanged at a record low of 150,000 units in February. This is a 5.8-month supply at the current sales pace.




New Green Building Code References ASTM Standards


Forty-six ASTM International standards covering various aspects of building construction are cited in the 2012 International Green Construction Code. Published by the International Code Council, the new model code addresses the construction and remodeling of commercial and residential structures. The IgCC is expected to increase cost savings and job growth while enabling safe and sustainable building design and construction.




ASTM International is one of five cooperating sponsors of the IgCC, along with the American Institute of Architects, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, the U.S. Green Building Council and the Illuminating Engineering Society. The new green code was developed at public hearings over the last three years with input from code and construction industry professionals, environmental organizations, policymakers and the public.




ASTM green construction standards such as E2399 on green roof systems, C1549 for solar reflectance and E2635 on water conservation in buildings are part of the 2012 code. Thirteen ASTM technical committees have standards referenced in the IgCC, with topics ranging from air quality to thermal insulation. Standards developed by ASTM Committees E06 on Performance of Buildings and E60 on Sustainability are well represented in the new green code.




The IgCC is the first model code to include sustainability measures for entire construction projects. For both new and existing buildings, it provides model code language related to energy conservation, water efficiency, site impacts, building waste, material resource efficiency and other sustainability measures. Early versions of the IgCC, which were released during the development of the code, already have been put into use by states and jurisdictions.





For further information on the standards development activities of ASTM Committees E06 on Performance of Buildings and E60 on Sustainability, contact Steve Mawn, staff manager, ASTM (phone: 610-832-9726; [email protected]).





Johns Manville Publishes 2011 Sustainability Report


Johns Manville, Denver, has published its 2011 sustainability report, “We Build Environments.” The publication can be viewed as a PDF file on the company’s website at www.jm.com/sustainability.





The report, which was completed using the Global Reporting Initiative framework, presents the company’s approach to sustainability and its progress toward achieving its long-term sustainability goals. In addition to information and case studies associated with energy efficiency, reducing the energy and carbon intensity of its operations, reducing solid waste and increasing use of recycled materials in several areas of its business, the report also highlights the company’s social responsibility in the areas of safety, employee practices and community investment.




Wolf Introduces Key Buyer Index to Gauge Demand for Building Materials
WOLF, the largest supplier of kitchen cabinets in the United States and a provider of building products along the East Coast, announces the creation of the WOLF Key Buyer Index, a proprietary new metric that offers a valuable monthly snapshot of sentiment among independent dealers.
WOLF will use KBI to provide a concrete measure of how building materials buyers see the near-term future of the residential construction industry. The initial KBI score, 79.8, reveals a bullish outlook for the coming month.




WOLF gathers data for the KBI from a monthly survey of key buyers at independent building materials dealers in WOLF’s 18-state sales territory. The initial survey, from the week of March 23, found that 63.8 percent of respondents reported their purchasing would increase over the following four weeks, 31.9 percent said purchasing would remain about the same, and 4.3 percent said their purchasing would decline.




Based on these responses, WOLF calculated the initial Key Buyer Index at 79.8. A WOLF KBI score of 50 reflects a neutral outlook; a score above 50 reflects a positive outlook; and a score below 50 reflects a negative outlook.




The company calculates the KBI using a formula similar to the monthly Purchasing Managers Index, a highly anticipated monthly indicator developed by the Institute for Supply Management in 1948.




WOLF will survey its customers and publish the Key Buyer Index each month in an effort to forecast industry sentiment and identify trends. WOLF will also develop a workable set of statistical adjustments for the index to reflect seasonal, market and product category variations.




See the latest KBI score at www.wolfleader.com.





Companies in the News


The EIFS Industry Members Association, Falls Church, Va., has announced its membership of the local chapter of the National Association of Home Builders. As part of this membership EIMA will actively participate on issues surrounding green building initiatives, legislative agendas, and local and state zoning regulations.




“An affiliation with the home builders is very exciting for us, as we view this as a way to not only help the builders but also current and future homeowners” said David Johnston, EIMA’s executive director. “We share many similar interests, including our shared desire to make homes more durable and energy efficient, which obviously benefits homeowners upfront and in the long run.”




Parex USA, Inc., the parent company of building material brands Parex, Teifs, LaHabra, El Rey and Merkrete, began the second quarter with a new approach to designing with exterior insulation and finish systems and stucco as outlined in its new Envision Campaign.




Parex USA embarked on the new Envision Campaign to communicate the unlimited design flexibility of the company’s EIFS and stucco solutions.




The campaign focuses around three main design elements: shape, color and texture.




Parex USA’s corporate marketing efforts to support the Envision Campaign include a signature 20-page brochure, a 5 minute promotional video, redesigned websites and more.




For more information, visit www.parex.com.

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