BuilderBytes' MetroIntelligence Economic Update for 12/30/14

Please click here to see the edition of BuilderBytes for 12/30/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Durable goods orders dropped for third straight month in November
• Both personal income and spending rose in November
• Initial unemployment claims dip by 9,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/26/14

Please click here to see the edition of BuilderBytes for 12/26/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales fall slightly in November to annual pace of 438,000 units
• FHFA House Price Index up 0.6 percent in October and 4.5 percent year-over-year
• Third quarter GDP rose 5.0 percent in third and final estimate
• Consumer confidence in December reaches highest level since January 2007

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/23/14

Please click here to see the edition of BuilderBytes for 12/23/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Existing home sales slid in November as supply tightens

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/19/14

Please click here to see the edition of BuilderBytes for 12/19/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Federal Reserve keeps interest rates steady for now; suggests rates may rise in 2015
• Initial unemployment claims fall by 6,000 in latest report
• Philadelphia Fed's Business Outlook Survey shows positive but slower growth in December
• Mortgage applications fall 3.3 percent even as rates decline to lowest level since May 2013

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/18/14

Please click here to see the edition of BuilderBytes for 12/18/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Building permits fell 5.2 percent in November; about even year-over-yea
• Housing stats tumbled 1.6 percent in November
• CPI fell by 0.3 percent in November; up by 1.3 percent over previous 12 months
• Empire State Manufacturing Survey declines in December 

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/16/14

Please click here to see the edition of BuilderBytes for 12/16/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Builder confidence fell one point in December to 57 but still well in positive territory
• Industrial production rose 1.3 percent in November; June-October pace also revised upwards
• Producer Price Index down by 0.2 percent in November but up by 1.4 percent over previous year
• Consumer sentiment rose in December to nearly an eight-year high

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/12/14

Please click here to see the edition of BuilderBytes for 12/12/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• November retail sales showed strongest gain since March
• Initial unemployment claims dip by 3,000 in latest report
• Business inventories rose more than expected in October
• Mortgage applications rise by 7.3 percent in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

December column for Builder & Developer magazine now online

My column for the December 2014 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "Homebuilding Year in Review," I provided my annual review of the past year and what we can expect in 2015. An excerpt:

Last year, I wrote about a housing rebound that seemed to finally have solid legs after a few false starts since the Great Recession. The good news for 2014 is that both the economy and the housing market have continued their slow yet gradual climb back to normal.

Indeed, the NAHB's Leading Markets Index, which measures how well metropolitan areas are performing relative to their last ‘normal’ market, rose to .90 in the third quarter of 2014. This means that the combination of permits, prices and employment levels are back to 90 percent of where they should be at a national level, although most of this rebound has been due to new permits and rising prices more than robust, uniform employment gains...

To read the entire column, click here.

To read the entire December 2014 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 12/10/14

Please click here to see the edition of BuilderBytes for 12/10/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Job growth hit 321,000 in November as unemployment rate remained unchanged at 5.8 percent
• Consumer borrowing rose less than forecast in October ahead of holiday season

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Job growth soared to 321,000 jobs in November

Today's job growth report was far better than projections, with The Washington Post calling it "the most assertive sign to date that the labor market is returning to pre-recession health:"

November’s numbers cap the best three-month period of labor market expansion since the financial crisis and keep the country on track for a year of job growth unseen since the late 1990s...The unemployment rate kept steady at 5.8 percent, its lowest mark since July 2008..."

From the original press release:

Total nonfarm payroll employment increased by 321,000 in November, and the unemployment rate was unchanged at 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains were widespread, led by growth in professional and business services, retail trade, health care, and manufacturing

In November, the unemployment rate held at 5.8 percent, and the number of unemployed persons was little changed at 9.1 million. Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively.

Among the major worker groups, the unemployment rate for adult men rose to 5.4 percent in November. The rates for adult women (5.3 percent), teenagers (17.7 percent), whites (4.9 percent), blacks (11.1 percent), and Hispanics (6.6 percent) showed little change over the month. The jobless rate for Asians was 4.8 percent (not seasonally adjusted), little changed from a year earlier. (See tables A-1, A-2, and A-3.)

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.8 million in November. These individuals accounted for 30.7 percent of the unemployed. Over the past 12 months, the number of long-term unemployed declined by 1.2 million...

Total nonfarm payroll employment rose by 321,000 in November, compared with an average monthly gain of 224,000 over the prior 12 months. In November, job growth was widespread, led by gains in professional and business services, retail trade, health care, and manufacturing..

Construction employment also continued to trend up in November (+20,000). Employment in specialty trade contractors rose by 21,000, mostly in the residential component. Over the past 12 months, construction has added 213,000 jobs, with just over half the gain among specialty trade contractors...

To read the entire release, click here. 

BuilderBytes' MetroIntelligence Economic Update for 12/05/14

Please click here to see the edition of BuilderBytes for 12/05/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Planned job cuts decline 30 percent in November, 2014 on pace for lowest annual total since 1997
• Initial unemployment claims dip by 17,000 in latest report
• Mortgage applications fall by 7.3 percent in latest survey, largely due to to Thanksgiving holiday

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/04/14

Please click here to see the edition of BuilderBytes for 12/04/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Private sector jobs grew by 208,000 from October to November
• Labor productivity grew by 2.3 percent in third quarter of 2014 due to higher output
• Construction spending rebounds 1.1 percent in October
• Manufacturing sector economy expanded in November on strong demand and new orders
• Service sector economy index expanded sharply in November

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 12/02/14

Please click here to see the edition of BuilderBytes for 12/02/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Overall durable goods orders rose in October but business investment fell
• Personal income and spending both rose slightly in October
• Chicago Business Barometer fell sharply in November
• Mortgage applications fall 4.3 percent in latest survey as rates slide down slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Happy Thanksgiving 2014

Happy Thanksgiving from MetroIntelligence and Housing Chronicles! Think you know everything about Thanksgiving from what you learned long ago in elementary school?  It’s actually a bit more complicated than you might’ve thought.

In the United States, the modern Thanksgiving holiday tradition traces its origins to a 1621 celebration at Plymouth in present-day Massachusetts.   However, there is also evidence for an earlier harvest celebration on the continent by Spanish explorers in Florida during 1565, as well as thanksgiving feasts in the Virgina Colony.

The initial thanksgiving observance at Virginia in 1619 was prompted by the colonists’ leaders on the anniversary of the settlement. The 1621 Plymouth feast and thanksgiving was prompted by a good harvest. In later years, the tradition was continued by civil leaders such as Gov. Bradford, who planned a thanksgiving celebration and fast in 1623. While initially the Plymouth colony did not have enough food to feed half of the 102 colonists, the Wampanoag Native Americans helped the Pilgrims by providing seeds and teaching them how to fish.   Still, the practice of holding an annual harvest festival like this did not become a regular affair in New England until the late 1660s.

According to historian Jeremy Bangs, director of the Leiden American Pilgrim Museum, the Pilgrims may have been influenced by watching the annual services of Thanksgiving for the relief of the siege of Leiden, The Netherlands, in 1574, while they were staying in Leiden.

Thanksgiving in North America had originated from a mix of European and Native traditions.Typically in Europe, festivals were held before and after the harvest cycles to give thanks for a good harvest, and to rejoice together after much hard work with the rest of the community.  At the time, Native Americans had also celebrated the end of a harvest season.

When Europeans first arrived to the Americas, they brought with them their own harvest festival traditions from Europe, celebrating their safe voyage, peace and good harvest.Though the origins of the holiday in both Canada and the United States are similar, Americans do not typically celebrate the contributions made in Newfoundland, while Canadians do not celebrate the contributions made in Plymouth, Massachusetts.

Thanksgiving in the United States, much like in Canada, was observed on various dates throughout history. 

The dates of Thanksgiving in the era of the Founding Fathers until the time of Lincoln had been decided by each state on various dates. The first Thanksgiving celebrated on the same date by all states was in 1863 by presidential proclamation. The final Thursday in November had become the customary date of Thanksgiving in most U.S. states by the beginning of the 20th century.

And so, in an effort by President Abraham Lincoln (influenced by the campaigning of author Sarah Josepha Hale who wrote letters to politicians for around 40 years trying to make it an official holiday), to foster a sense of American unity between the Northern and Southern states, proclaimed the date to be the final Thursday in November.

It was not until December 26, 1941, that the unified date changed to the fourth Thursday (and not always final) in November -- this time by federal legislation. President Franklin D. Roosevelt, after two years earlier offering his own proclamation to move the date earlier, with the reason of giving the country an economic boost, agreed to sign a bill into law with Congress, making Thanksgiving a national holiday on the fourth (not final) Thursday in November.

Source:  Wikipedia

BuilderBytes' MetroIntelligence Economic Update for 11/26/14

Please click here to see the edition of BuilderBytes for 11/26/14 on the Web.

In this separate issue of the MetroIntelligence Economic Update, I covered the following indicators:

• New home sales report small increase in October
• Pending home sales slowed in October but still higher than a year ago
• 2nd quarter 2014 GDP rises from 3.5 to 3.9 percent in second estimate
• Case-Shiller Home Price Indice gains continue to decelerate
• FHFA House Price Index up 4.5 percent year-over-year in 3Q 2014 
• Consumer confidence takes dip in November due to short-term outlook
• Initial unemployment claims rise by 21,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/25/14

Please click here to see the edition of BuilderBytes for 11/25/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Philadelphia Fed Business Outlook Survey increased notably in November
• Mortgage applications rise by nearly five percent as rates remain mostly stable in latest survey

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

2014 in Review: A Slow, Gradual Return to Normal

Last year, I wrote about a housing rebound that seemed to finally have solid legs after a few false starts since the Great Recession.  The good news for 2014 is that both the economy and the housing market have continued their slow yet gradual climb back to normal.

Indeed, the NAHB’s Leading Markets Index, which measures how well metropolitan areas are performing relative to their last ‘normal’ market, rose to .90 in the third quarter of 2014.  This means that the combination of permits, prices and employment levels are back to 90 percent of where they should be at a national level, although most of this rebound has been due to new permits and rising prices more than robust, uniform employment gains.

Still, the national job market continues to improve strongly, adding well over 200,000 jobs per month for most of the year, thereby bringing the official unemployment rate down to 5.8 percent.  Since this rate of growth is about double the pace required to reduce unemployment and under-employment, wages could soon come under pressure to rise after years of being stuck near neutral, which could counter-act the impact of future interest rate hikes and higher housing prices.

At the same time, the economic rebound has not been consistent across the country, with much stronger job growth in those states which have benefitted from the domestic energy boom, military or agricultural spending, or include small college towns.   Conversely, those states with weaker labor markets – such as Arizona, Nevada, Rhode Island or New Jersey – also continue to exhibit weaker housing fundamentals.

Nonetheless, from a confidence standpoint, both builders and consumers have been reporting positive attitudes, with the NAHB Housing Market Index rising four points in November to 58, with even stronger gains for the index measuring current sales conditions.  Consumer sentiment has recently been even stronger, rising in November to more than a seven-year high even though respondents don’t expect future income gains to keep up with inflation.

While overall housing starts did take an unexpected but small dip in October from the previous month, they still rose by nearly eight percent year-over-year.  At the same time, starts for single-family homes were still up by just over four percent between September and October to the highest rate since November of 2013.   But it was really building permits – often a forward-looking indicator of market activity – which revealed gradually building strength for housing, rising by nearly five percent in October to the highest level in nearly 6.5 years.

New home sales have also continued to climb, rising by 17 percent between September of 2013 and 2014 to an annual rate of 467,000 units, which would take 5.3 months to sell at current sales rates, down from 5.5 months the previous year.  New home median prices, however, fell to $259,000 from $269,800 during that same time period, most likely due to a higher percentage of sales in the South.

For existing homes, sales rose in October for the second straight month after a challenging spring and relatively flat summer, reaching their highest annual rate since September of 2013 as well as being above year-over-year levels for the first time in over a year.  At the same time, inventory levels fell to a 5.1-month supply, which was the lowest supply timeline since last March.  Existing home prices reached $208,300 in October, up by 5.5 percent over the same month of 2013 and marking the 32^nd straight month of year-over-year price gains.

The remodeling market is also strong, with the NAHB Remodeling Market Index matching its record high of 57 in the third quarter of 2014 even after a dip in activity earlier in the year due to an unusually harsh winter.

Looking ahead to 2015, forecasts are generally calling for continuing expansion for both the U.S. economy and its housing market.  U.S. GDP is expected to sustain its 3.0 percent growth rate due to ongoing fiscal stimulus, lower energy costs (especially for gasoline), slowly easing credit conditions and more positive business and consumer confidence.  However, a stronger dollar will likely dampen exports, and the Fed will probably start boosting its Federal funds rate sometime in 2015.

As for housing, look for housing starts to rise by another 20 percent in 2015, with most of that increase noted for single-family homes built to fulfill a large supply of pent-up supply over the past few years.  Still, as household formations increase in 2015, look for the rental market in urban markets to remain tight as rent growth exceeds inflation.

BuilderBytes' MetroIntelligence Economic Update for 11/21/14

Please click here to see the edition of BuilderBytes for 11/21/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Existing home sales rose in October to highest annual rate in over a year
• Leading Economic Index rose sharply in October as economic expansion continues
• CPI unchanged in October, up by 1.7 percent over previous 12 months
• Initial unemployment claims fall by 2,000 in latest report

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/20/14

Please click here to see the edition of BuilderBytes for 11/20/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Builder confidence rises four points in November to 58
• Overall housing starts dipped in October even as single-family starts rose four percent 
• Building permits rose sharply in October to six-year high
• Producer Price Index up by 0.2 percent in October and just 1.5 percent over previous 12 months

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/18/14

Please click here to see the edition of BuilderBytes for 11/18/14 on the Web.

In this separate issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Consumer sentiment rises to seven-year high in November
• Retail sales rebounded strongly in October, heralding a strong holiday sales season
• Empire State Manufacturing Survey continued to expand in November
• Industrial production edged down slightly in October as capacity utilization remains slightly below long-term average
• Business inventories rose slightly in September as sales remained flat

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

November column for Builder & Developer magazine now online

My column for the November 2014 issue of Builder and Developer magazine is now posted online.

For this issue, entitled "Where are the First-Tme Homebuyers?" I was struck by the decline in first-time homebuyers in recent months and wanted to investigate further.  An excerpt:

During the month of September, while both new and existing home sales rose slightly, there was one group which continues to remain somewhat on the sidelines: the first-time buyer. According to the National Association of Realtors®, in September the share of first-time buyers was 29 percent for the third straight month.

Since historically the share of first-time buyers has been closer to 40 percent, given that these buyers have represented less than 30 percent of the market in 17 of the last 18 months, it’s almost certain that this change will have an impact on the housing market in the future. So just where have these buyers gone, and what are their plans for their housing needs?

For now, most are choosing to rent: according to the Census Bureau, the share of households age 25 to 29 who owned their own homes fell from nearly 41 percent in 2007 to 34 percent by 2013, which is great for landlords but not for the neighborhood stability which accompanies higher percentages of homeownership...

To read the entire column, click here.

To read the entire November 2014 issue in digital format, click here.

BuilderBytes' MetroIntelligence Economic Update for 11/14/14

Please click here to see the edition of BuilderBytes for 11/14/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Initial unemployment claims rise by 12,000 in latest report
• Job openings declined to 4.7 million in September even as quits rate rose
• Wholesale inventories rose more than expected in September
• Mortgage applications fall 0.9 percent in latest survey as rates rebounds slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/13/14

Please click here to see the edition of BuilderBytes for 11/13/14 on the Web.

In a separate issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Wholesale inventories rose more than expected in September
• Mortgage applications fall 0.9 percent in latest survey as rates rebound slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/11/14

Please click here to see the edition of BuilderBytes for 11/11/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicator:

• Employment rose by 214,000 in October as unemployment edged down to 5.8 percent

In addition, there was also the following release:

• Consumer credit grew in September as demand for car loans and student loans rose

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Employment rose by 214,000 in October as unemployment rate edged down to 5.8 percent

It looks like the trend towards continued strong job growth continued in October.  From today's press release:

Total nonfarm payroll employment rose by 214,000 in October, and the unemployment rate edged down to 5.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, retail trade, and health care...

Since the beginning of the year, the unemployment rate and the number of unemployed persons have declined by 0.8 percentage point and 1.2 million, respectively.

Among the major worker groups, the unemployment rate for whites declined to 4.8 percent in October. The rates for adult men (5.1 percent), adult women (5.4 percent), teenagers (18.6 percent), blacks (10.9 percent), and Hispanics (6.8 percent) changed little over the month. The jobless rate for Asians was 5.0 percent (not seasonally adjusted), little changed from a year earlier.

In October, the number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.9 million. These individuals accounted for 32.0 percent of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.1 million.

The civilian labor force participation rate was little changed at 62.8 percent in October and has been essentially flat since April. The employment-population ratio increased to 59.2 percent in October... 

Employment also continued to trend up in transportation and warehousing (+13,000) and construction (+12,000)...

Over the year, average hourly earnings have risen by 2.0 percent...

BuilderBytes' MetroIntelligence Economic Update for 11/7/14

Please click here to see the edition of BuilderBytes for 11/7/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Planned job cuts rose sharply in October
• Initial unemployment claims dip by 10,000 in latest report
• Productivity rose by 2.0 percent in 3Q 2014 as output rose faster than hours worked

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 11/6/14

Please click here to see the edition of BuilderBytes for 11/6/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• ADP Employment Report shows 230,000 new jobs from September to October
• Manufacturing sector index continued to expand in September for 17th straight month
• Service sector economy continued to grow in September, but rate of expansion slowing down
• Durable goods orders fell for second straight month in September; decline likely to be temporary
• Mortgage applications fall by 2.6 percent in latest survey as rates rise slightly

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

NAHB: Single-Family Production Poised to Take Off in 2015

According to the NAHB's 2014 Fall Construction Forecast Webinar on October 31st, "a growing economy, rising household formations, low mortgage rates and pent-up demand will help single-family housing production to rev up in 2015 while a growth in renters will keep the multifamily market at cruising altitude or higher."

From the press release:

NAHB is forecasting 991,000 total housing starts in 2014, up 6.6 percent from 930,000 units last year. Single-family production is expected to rise 2.5 percent this year to 637,000 units, increase an additional 26 percent next year to 802,000 and reach 1.1 million in 2016.

Setting the 2000-2003 period as a benchmark for normal housing activity when single-family production averaged 1.3 million units annually, single-family starts are expected to steadily rise from 48 percent of what is considered a typical market in the third quarter of 2014 to 90 percent of normal by the fourth quarter of 2016.

Multifamily starts, which NAHB Chief Economist David Crowe said are now at a normal level of production, are projected to increase 15 percent in 2014 to 356,000 units and hold steady next year.

Meanwhile, the NAHB Remodeling Market Index, which averages ratings of current remodeling activity with indicators of future activity, matched its all-time high of 57 in the third quarter of 2014 and has been above 50 for six consecutive quarters. A reading above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.

NAHB is forecasting that residential remodeling will post a 3.4 percent decline in 2014 over last year, due in large part to slow activity in the first quarter caused by an unusual harsh winter throughout much of the nation. Residential remodeling activity is expected to rise 2.7 percent in 2015 and an additional 1.3 percent in 2016."

BuilderBytes' MetroIntelligence Economic Update for 11/4/14

Please click here to see the edition of BuilderBytes for 11/4/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• Construction spending fell for second straight month in September, but August decline revised lower
• Consumer confidence rises again in October to highest level since July 2007
• Personal income rose 0.2 percent in September as consumer spending fell by similar amount
• Chicago Business Barometer rose to one-year high in October

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

BuilderBytes' MetroIntelligence Economic Update for 10/31/14

Please click here to see the edition of BuilderBytes for 10/31/14 on the Web.

In this issue of the MetroIntelligence Economic Update, I covered the following indicators:

• 3Q 2014 GDP rose by 3.5 percent in advance estimate
• Federal Reserve ends QEIII, will now focus on interest rates
• Initial unemployment claims rise by 3,000 in latest report
• Mortgage applications dip 6.6 percent in latest survey, interest rates up slightly 

Want to advertise in the newsletter and reach over 130,000 readers? Contact National Sales Manager Nick Cosan at nkosan@penpubinc.com.

Where are the first-time homebuyers? Demographic shifts point to delayed milestones.

During the month of September, while both new and existing home sales rose slightly, there was one group which continues to remain somewhat on the sidelines:  the first-time buyer.  According to the National Association of Realtors®, in September the share of first-time buyers was 29 percent for the third straight month. 

Since historically the share of first-time buyers has been closer to 40 percent, given that these buyers have represented less than 30 percent of the market in 17 of the last 18 months, it’s almost certain that this change will have an impact on the housing market in the future.  So just where have these first-time buyers gone, and what are their plans for their housing needs?

For now, most are choosing to rent:  according to the Census Bureau, the share of households age 25 to 29 who owned their own homes fell from nearly 41 percent in 2007 to 34 percent by 2013, which is great for landlords but not for the neighborhood stability which accompanies higher percentages of homeownership.

Not surprisingly, the primary reason they’re choosing to rent for now is economic:  according to the non-profit group Generation Opportunity, unemployment rates for millennials (those born between 1980 and 1995) remain higher than for other age groups.  Even when they do find employment, many jobs are either part-time or offer low, entry-level wages which wouldn’t help them qualify for mortgages.

Considering that the average worker today doesn’t earn the national median salary until age 30 – versus age 26 in 1980 – a four- or five-year delay in reaching traditional milestones such as getting married, starting families and buying homes seems to mirror the temporary disappearance of many first-time homebuyers.  Consequently, if the median age for a first-time homebuyer has been about 31 -- and 47 for a move-up buyer -- any delays in grabbing the first rung of that homeownership ladder are likely to have an impact on future purchases.

In addition, other factors have also been at play here, including tougher mortgage loan standards, a lack of entry-level home inventory, and student loan debt that often must be paid down before buyers can qualify for a mortgage.  Meanwhile, young adults trying to save for down payments must also contend with rising housing costs, with many households paying 30 percent – and much higher in high-cost cities – of their incomes on rent.

Fortunately, despite these considerable headwinds facing young adults, the ongoing speculation that millennials won’t embrace homeownership as much as previous generations simply isn’t true:  It’s simply being delayed.   In fact, according to recent research from Zillow, the dip in first-time home buyers has been much more about long-term changes in family structures that it is about current economic conditions.

If anything, young adults are simply trying to navigate a mortgage system that simply hasn’t kept up with the times.  Given that 90 percent of today’s mortgages are supported by various government programs (up from 40 percent a decade ago), another reason for fewer first-time buyers could simply be a lack of mortgage options which would open up the lending spigot.

Indeed, for married, dual-income couples, the homeownership rate is actually above pre-recession historical levels, whereas it has dropped for the increasingly rare, traditional family structure of two parents who live on a single full-time income.  For young singles, although the rate of homeownership has been mostly flat over the last decade, this rate still seriously lags those of married couples.  Consequently, if the rate of marriage for young adults today stands at about 26 percent – compared with 36 percent of Gen Xers, 48 percent of baby boomers and 65 percent of the Silent Generation at the same age – we certainly shouldn’t be surprised at their delay in settling down and buying homes.

For builders, the challenge is to offer homes today that millennials want, and that means more urban-oriented projects close to transit centers that can effectively compete with upscale rental projects which continue to offer more compelling amenities.

As for the millennials themselves, the future job market is already pivoting towards them, as many of them sat out the poor labor market of the recession by improving their education.  Last year, 34 percent of those aged 25 to 29 held some type of college degree, making them the best-educated cohort since 1968.  With their comfort of the latest technologies and awareness of current cultural tastes, for many employers the combination of these factors at a lower salary than older, more seasoned candidates will prove hard to resist.