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New home construction up 17.2 percent in May
Construction of new homes skyrocketed 17.2 percent in May, marking the largest gain in three months, the Commerce Department reported. The seasonally adjusted annual rate rose to 532,000 units, after construction fell in April to a record low of 454,000 units.
The construction included a 7.5 percent rise in single-family homes, and a 61.7 percent rise in multifamily units (to 131,000 units annually). In April, construction of multifamily homes had plunged 49.4 percent.
Additionally, applications for building permits rose 4 percent in May, to an annual rate of 518,000 units.
Majority of homeowners are ready to remodel
A Consumer Reports poll taken by home-owners in June reveals that over the next 12 months, 54 percent of the respondents are planning a remodeling project and 65 percent will do some of the work themselves. Flooring (34 percent) is high on the remodel list following painting (56 percent), and designing (39 percent).
The poll also revealed the most popular remodeling projects remain in the kitchen (19 percent) and bathroom (17 percent). Because of the economic downturn, homeowners said they are scaling back some of their more elaborate plans – 36 percent said they will remodel in phases. However, there is still an obvious need for skilled installers, as 34 percent of respondents said they regret trying to fix an appliance or install flooring or cabinets themselves.
Pending home sales rise for fourth month
Pending home sales rose 0.1 percent in May, spurred by affordability and incentives for first-time buyers, according to the National Association of Realtors. The slight uptick in sales activity marked the fourth month in a row the index rose, at a rate 6.7 percent higher than last year.
Pending home sales were up 3.1 percent in the Northeast and 2.2 percent in the West. However, they were down slightly in other regions, including a 1.7 percent dip in the South and a 1.3 percent drop in the Midwest.
The group also reported that sales of existing homes rose 2.4 percent in May, marking the first back-to-back monthly gain since September 2005. The seasonally adjusted annual rate rose to 4.77 million units, while total housing inventory (existing homes available for sale) fell 3.5 percent to 3.8 million units. This represents a 9.6-month supply of unsold homes at the current pace, down from a 10.1-month supply in April.
Regionally, existing home sales rose 3.9 percent in the Northeast to an annual level of 800,000. Sales in the Midwest climbed 9 percent to a pace of 1.09 million. In the South, existing home sales remained flat at 1.74 million. The only region posting a slight dip was the West, down 0.9 percent to 1.14 million. However, the annual rate in the area was 11.8 percent higher than last year.
Conference Board says recession ‘losing steam’
The index of leading economic indicators, designed to forecast activity in the next three to six months, rose 1.2 percent in May, according to the Conference Board. The May numbers were the second straight gain after seven months of declines.
“The recession is losing steam,” said Ken Goldstein, Conference Board economist. “If these trends continue, expect a slow recovery beginning before the end of the year.”