OCTOBER 25 27,

Transcription

1 OCTOBER 25 27,

2 US Housing & Remodeling Market Outlook SHERATON KANSAS CITY, MO OCTOBER 25 27, 2016

3 MACRO ECONOMIC OUTLOOK

4 Unemployment Has Returned to a Normalized Rate 19.0% Unemployment Rate Trend 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% 3.0% Expanded Unemployment Rate (U-6) Official Unemployment Rate 4.9% 9.7% Source: U. S. Bureau of Labor Statistics Source: Moody s, U. S. Bureau of Labor Statistics

5 Job growth has leveled off a bit 4,000,000 Year-over-Year Job Growth, NSA, ,522,000 YOY 2,000,000 - (2,000,000) (4,000,000) (6,000,000) (8,000,000) Source: U. S. Bureau of Labor Statistics

6 Service sectors have led the job recovery Employment Growth by Industry, 2Q 2016 Prof & Business Services Transportation, Trade & Utilities Education & Health Services Leisure & Hospitality Construction Financial Activities Manufacturing Information Natural Resources & Mining Government Other Services (200,000) (100,000) - 100, , , , , , ,000 Source: U. S. Bureau of Labor Statistics

7 Employees, in Thousands 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Job quality a factor service sectors have led the job recovery Manufacturing Workers vs. Waiters/Bartenders, Source: U. S. Bureau of Labor Statistics Waiters and Bartenders Manufacturing Workers

8 GDP HAS BEEN UNDERPERFORMING THE LAST FEW QUARTERS 8% 6% 4% GDP Quarterly Growth Rate AVERAGE SINCE 1980 = 2.5% 2% 0% 1.2% -2% -4% -6% -8% -10% Source: U. S. Bureau of Economic Analysis

9 160 Consumer Confidence still strong, just below Consumer Confidence Source: The Conference Board Consumer Confidence Index

10 STATE OF THE ECONOMY Slowly Improving Job Picture Unemployment Gradually Shrinking Housing Production Recording Solid Gains So-So Consumer Confidence Interest Rates Remain Low Despite Hike Source: The Conference Board Consumer Confidence Index

11 THREATS TO THE ECONOMY Eventual Rise In Interest Rates Volatile GDP Growth/Decline Quality of Jobs Being Created Not Especially Good International Events Impacting US Economy Source: The Conference Board Consumer Confidence Index

12 RESIDENTIAL OUTLOOK

13 2017 Will Be the Strongest Year in Residential Spending Since Maintenance Remodels New SF Construction New MF Construction $ Millions Spending To Be Up 6%, Supported By: 4% Growth in Remodeling 11% Growth in Single Family Multi-Family is expected to slip down 5% as Single Family continues to ramp up F 2017F Source: Metrostudy Forecast

14 2,500 Finished at 1.11M Starts for 2015 with 7% growth FOR 2016 Residential Starts History and Forecast Single Family Multi-family 55 Year Average 2,000 1, year average million Forecast 1, Source: Commerce Department; Metrostudy Forecast

15 Resales Are at Strong Levels, While New Home Sales Are Still relatively Low National Annualized Home Closings by Type, 2007-Jun ,000,000 6,000,000 5,000,000 New Sale Share Stabilized but below 10% 25% 20% Home Closings 4,000,000 3,000,000 15% 10% New Home Share 2,000,000 1,000,000 0 Tax Credit Expiration 5% 0% Source: Metrostudy Regular Resale REO Sale New Sale New Sale Share

16 Existing Home Sales Remain Above Normal Levels SF Home Sales, Jun 2016 (SAAR Thousands) 9,000 8,000 7,000 6,000 New Existing 5,000 4,000 3, year average 4.4 million million sans ,000 1,000 0 Source: Commerce Department, National Association of Realtors, Metrostudy Analysis

17 120,000 Observed Starts Up 7.6% over Q ,000 80,000 60,000 40,000 20,000 0 Source: Metrostudy Quarterly Starts Quarterly Closings

18 Most Indicators Are IMPROVED Vs. Q % Improvement Deterioration Neutral 20.0% 19.6% 16.5% 15.0% 10.0% 5.0% 0.0% -5.0% 13.0% 8.4% 9.9% 8.8% 10.5% 9.6% -3.1% 6.0% 0.6% 10.6% 2.8% -0.2% -10.0% -15.0% -14.3% -20.0%

19 Nationwide Price Increases Continue with Moderate Appreciation Expected Ahead Measures of Median Home Prices $350,000 $300,000 Regular Resale REO Sale New Sale Reg Resale + REO NAR Median Existing (SF) New Home Median Price Surprassed $300k For The First Time $250,000 $200,000 $150,000 Existing Home Price Forecast Callsfor Gradual Levelling $100,000 $50,000 $ present Source: Metrostudy, NAR, Moody's Analytics

20 In New Home Market, Lower Priced Homes Continue to Diminish in Share New Closings by Price Distribution, Nationwide, 2005-Jun % 90% 80% 70% 60% 50% 40% 30% 20% 10% % Source: Metrostudy $0k-$200k $200k-$400k $400k-$700k $700k+

21 Investors Helped Fix the Foreclosure Induced Excess Supply in the Resale Market Investor Purchase Share by Sale Type 60% Regular Resale REO Sale New Sale 50% 40% 30% 20% 10% 0% Source: Metrostudy

22 Consolidation Continues Closings for Top 10, 100, & 200 Home Builders Over Time & Market Share Nationwide 600,000 70% 500,000 60% New Home Closings 400, , ,000 50% 40% 30% 20% Market Share 100,000 10% % Top Top 10 Share Top 100 Share Top 200 Share Source: Metrostudy 22

23 Challenges In Several Areas Today but Labor is the #1 Concern 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

24 Builders Are Having Trouble Finding Framers 90.0% What Positions Are You Having the Most Trouble Filling? 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0%

25 Labor Issues Are Driving Up Labor Costs and Increasing Delivery Times 80% How Are Labor Shortages Affecting You? 70% 60% 50% 40% 30% 20% 10% 0% Increasing Delivery Times Increasing Labor Expenses Reducing Quality Loss of Other Subcontractors Disrupting Pro Formas Limiting Ability to Sell New Home Contracts Increasing Material Loss of Home Expenses Contracts In Progress

26 REMODELING

27 Read All About It!

28 Remodeling Projects Expected to Reach a New HIGHS Rate of Activity Will Be Up 4.2% in ,000,000 12,000,000 Pro-Worthy Remodeling Projects Forecast 10,000,000 8,000,000 6,000,000 4,000,000 2,000,

29 Dollars tracking with number of projects

30 Aging Housing Stock Is Key Contributor

31 Closings Are Key Indicator

32 Remodeling Market Project Counts: WINDOWS Millions Source: Metrostudy, RRI Report, August 2016

33 Remodeling Market Project Counts: DOORS Millions Source: Metrostudy, RRI Report, August 2016

34 Remodeling Market Project Counts: ADDITIONS Millions Source: Metrostudy, RRI Report, August 2016

35 Remodeling Market Project Counts: KITCHEN & BATH Millions Source: Metrostudy, RRI Report, August 2016

36 Remodeling Market Project Counts: HVAC Millions Source: Metrostudy, RRI Report, August 2016

37 Remodeling Market Project Counts: ROOFING Millions Source: Metrostudy, RRI Report, August 2016

38 Remodeling Market Project Counts: SIDING Millions Source: Metrostudy, RRI Report, August 2016

39 Remodeling Market Project Counts: BATHROOMS 6 Millions Source: Metrostudy, RRI Report, August 2016

40 Remodeling Market Project Counts: KITCHENS Millions Source: Metrostudy, RRI Report, August 2016

41 Remodeling Market Project Counts: DECKS Millions Source: Metrostudy, RRI Report, August 2016

42 Remodeling Market Project Counts: INSULATION Millions Source: Metrostudy, RRI Report, August 2016

43 Remodeling Market Project Counts: BASEMENTS Millions Source: Metrostudy, RRI Report, August 2016

44 Alignment with the right consumers

45 TOP MARKETS

46 Growth Is Most Reliable in Healthy Markets, and MOST MARKETS ARE DOING WELL Source: Metrostudy Home Building Outlook Report

47 Top 10 Healthiest Markets 1. Greeley, CO 2. Naples-Immokalee-Marco Island, FL 3. Denver-Aurora-Lakewood, CO 4. North Port-Sarasota-Bradenton, FL 5. San Jose-Sunnyvale-Santa Clara, CA 6. Austin-Round Rock, TX 7. Provo-Orem, UT 8. San Francisco-Oakland-Hayward, CA 9. St. George, UT 10.Salt Lake City, UT Source: Metrostudy Home Building Outlook Report

48 Best Markets for NEW Home Building Source: Metrostudy Home Building Outlook Report

49 Top 10 Best Home Building Markets 1. Denver-Aurora-Lakewood, CO 2. Boise City, ID 3. North Port-Sarasota-Bradenton, FL 4. Salt Lake City, UT 5. Phoenix-Mesa-Scottsdale, AZ 6. San Francisco-Oakland-Hayward, CA 7. Provo-Orem, UT 8. Minneapolis-St. Paul-Bloomington, MN-WI 9. Orlando-Kissimee-Sanford, FL 10.Dallas-Fort Worth-Arlington, TX Source: Metrostudy Home Building Outlook Report

50 Biggest Home Building Markets (2016 New Home Sales) 1. Dallas-Fort Worth-Arlington, TX 2. Houston-The Woodlands-Sugar Land, TX 3. Phoenix-Mesa-Scottsdale, AZ 4. Atlanta-Sandy Springs-Roswell, GA 5. Washington-Arlington-Alexandra, DC-VA-MD-WV 6. New York-Newark-Jersey City, NY-NJ-PA 7. Charlotte-Concord-Gastonia, NC-SC 8. Austin-Round Rock, TX 9. Orlando-Kissimmee-Sanford, FL 10.Denver-Aurora-Lakewood, CO Source: Metrostudy Home Building Outlook Report

51 Biggest Multi-Family Construction Markets (2016 MF Starts) 1. New York-Newark-Jersey City, NY-NJ-PA 2. Dallas-Fort Worth-Arlington, TX 3. Los Angeles-Long Beach-Anaheim, CA 4. Houston-The Woodlands-Sugar Land, TX 5. Washington-Arlington-Alexandria, DC-VA 6. Denver-Aurora-Lakewood, CO 7. San Francisco-Oakland-Hayward, CA 8. Austin-Round Rock, TX 9. Seattle-Tacoma-Bellevue, WA 10.Miami-Fort Lauderdale-West Palm Beach, FL Source: Metrostudy Home Building Outlook Report

52 Best Markets for Remodeling Source: Metrostudy Residential Remodeling Index October 27, 2016

53 Top 10 Remodeling Markets 1. San Jose-Sunnyvale-Santa Clara, CA 2. San Francisco-Oakland-Hayward, CA 3. Seattle-Tacoma-Bellevue, WA 4. Cleveland-Elyria, OH 5. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 6. Indianapolis-Carmel-Anderson, IN 7. Sacramento-Roseville-Arden-Arcade, CA 8. San Diego-Carlsbad, CA 9. Bridgeport-Stamford-Norwalk, CT 10. Portland-Vancouver-Hillsboro, OR-WA Source: Metrostudy Residential Remodeling Index

54 Biggest Remodeling Markets 1. New York-Newark-Jersey City, NY-NJ-PA 2. Los Angeles-Long Beach-Anaheim, CA 3. Chicago-Naperville-Elgin, IL-IN-WI 4. Dallas-Fort Worth-Arlington, TX 5. Washington-Arlington-Alexandria, DC-VA-MD-WV 6. Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 7. Houston-The Woodlands-Sugar Land, TX 8. Atlanta-Sandy Springs-Roswell, GA 9. Miami-Fort Lauderdale-West Palm Beach, FL 10.Boston-Cambridge-Newton, MA-NH Source: Metrostudy Residential Remodeling Index

55 Parting Thoughts The employment situation is ok, with broad private sector gains across almost all sectors, which is good for housing. However, labor force participation rate is still very low from a historical perspective, and the quality of jobs being created is not excellent. With 2.8 million jobs created during the past 12 months, the economic expansion continues to fuel strong demand for new housing. Growth is continuing and is expected to proceed gradually in both remodeling and new construction.

56 Parting Thoughts Low Oil Prices should give a strong multiplier on consumer expenditures. Retail sales associated with Tourism, Remodeling, Replacement, Home Furnishings and Health do especially well. Metrostudy forecasts that 1.28 million residential permits will be issued in 2016, translating to construction of 1.1 million homes and apartments. For every house built in the U.S., 2.8 jobs are expected to be created. Mortgage rates will begin to gradually rise by the latter part of Year West coastal office markets from San Diego to Seattle will be very strong.

57 Parting Thoughts Select Texas markets are in or heading toward much slower market conditions. Over the next five years, the state of housing is expected to stay healthy in terms of transactions and volume, but demand will most likely continue to outpace supply. We are expecting nationwide Total Housing Starts to gain 7% this year and, for Single Family, we expect 13.7% pace, with Multi-Family declining by 5.3%. Next year we are forecasting 10.5% Single Family growth and a 2.1% decline in Multi-Family.

58 2017 CURRENT FORECAST 1,265,000 STARTS 638,000 NEW HOME SALES 11,935,833 REMODELING PROJECTS

59 See you next year at The 2017 Remodelers Summit! OCTOBER 25 27,