As one of the homebuilding industry’s leading providers of garage doors, we keep a close eye on national homebuilding trends and statistics. Almost three months into the year, here are a few trends on the kind of building taking place, the pace of building and mortgage rates that help to explain the performance of homebuilding in the first quarter of 2014:
- Multi-family construction: The Wall Street Journal reported on March 9 that the share of new homes being built as rental apartments is at its highest level in decades. One of the biggest reasons for this, the paper reports, is that job prospects are improving for Millennials. This is allowing them to leave Mom and Dad’s nest or move out of shared homes into their own apartments. At the same time, lending standards are still tight, which is keeping this generation renting instead of buying. In addition, Baby Boomers are downsizing into smaller digs, which leads the paper to predict that there is going to be a greater emphasis on multi-family building for some time to come.
- Long cold winter begets slow first quarter: It used to be that only those who live north of the Mason-Dixon line had cause to complain about the weather in the winter – not so this year. Winter storm after winter storm slammed much of the Eastern half of the United States this year, even distributing snow and ice as far south as Atlanta. That cold weather has had an impact on homebuilding, particularly in the Northeast and Midwest. According to the U.S. Department of Commerce, building permits in January were down a seasonally adjusted 5.4 percent from the month before, but they were still up 2.4 percent compared to January 2013. It was the same story in November and December, too, with building permits declining month-to-month but still improved over the year-ago periods. In the next few months we should learn if these declines are weather-related or the continuation of a trend.
- Mortgage rates grow … slightly: March 13th saw the release of news from Freddie Mac that mortgage rates climbed to 4.37 percent for a 30-year, fixed-rate mortgage from 4.28 percent just a week earlier. For 15-year mortgages, the fixed rate moved up to 3.38 percent from 3.32 percent. The mortgage giant’s chief economist noted that the increase was due to a jobs picture that continues to improve.
“Mortgage rates edged up amid a week of light economic reports. Of the few releases, the economy added 175,000 jobs in February, which was above the market consensus forecast and followed an upward revision of 25,000 jobs for the prior two months,” said Frank Nothaft, vice president and chief economist, Freddie Mac. “Meanwhile, the unemployment rate nudged up to 6.7 percent, the first rate increase in over a year.”
What is homebuilding looking like in your region? Is it picking up, slowing down or remaining steady? Leave a reply below to let us and your fellow Wayne Dalton dealers know what conditions are like in your region.