May 8, 2013
To celebrate National Home Remodeling Month in May, the National Association of Home Builders (NAHB) Remodelers recommends that home owners consider the safety risks, time delays and hidden costs before attempting do-it-yourself (DIY) home improvements.
According to the 2011 American Housing Survey (AHS) from the HUD/Census Bureau, home owner do-it-yourself (DIY) projects accounted for 37 percent of all home remodeling projects performed nationwide from 2010-2011 but only 18 percent of all remodeling spending. DIY home improvement projects tend to be smaller, require less technical training and expertise and cost less, with 50 percent of home owners spending less than $950 on these projects. At the same time the median spending on professional remodeling projects is close to $4,000.
One of the most expensive remodeling projects is a kitchen addition, with half of these projects costing more than $27,000. Very few homeowners attempt or manage to add a kitchen on their own. The AHS data show that more than 80 percent of kitchen additions are done professionally. Replacing roofing is also largely outsourced to professional remodelers, 82 percent of these projects are completed by professionals. Home owners also tend to hire professionals when it comes to home improvement projects that require technical training and, often, a professional license. Close to 90 percent of all remodeling projects that involve adding or replacing HVAC system are done professionally. Almost two thirds of projects that replace internal water pipes, electrical system, major equipment and appliances are completed by professionals. Not only that home owners might not have the right tools and knowledge to complete these projects, but many warranties become void by improper installation.
Home owners are more adventurous and successful in finishing smaller projects. About half of all plumbing fixtures replacements are completed with no professional help. More than half of all bedroom and recreation room renovations are completed by home owners as well. These tend to be smaller projects, with half of them costing less than $1,500 and $1,600, respectively. Professional bedroom and recreation room renovations are bigger in scope with median spending of $5,000 and close to $7,000, respectively.
For additional tips and considerations before taking on a DIY home remodel read the National Association of Home Builders (NAHB) Remodelers press release
February 1, 2013
Private residential construction spending jumped 2.2% on a month-to-month basis during December 2012. The initial estimate of a 0.4% gain for November was moved up slightly to a 0.6% increase, but the October number was pushed appreciably higher from 1.3% to 3.2%. Spending has registered nine uninterrupted months of growth, as well as 16 of the last 17 months showing expansion. The nominal dollar level of spending has now reached its highest point since late 2008 and the average from the last three months is 32% above the cyclical low.
Spending on new single-family homes decelerated to its slowest pace of month-to-month growth since the first quarter of 2012, rising 0.8% versus November. On a year-over-year basis, the nominal value of spending on new homes has risen over 28%. In addition, since bottoming out around the midway point of 2009, construction spending has surged 59%. The current NAHB forecast calls for single-family housing starts to expand for the entirety of the outlook period, but a slower pace of growth is anticipated during the first quarter of this year. They are expected to re-accelerate over the remainder of 2013, and thus we anticipate a similar pattern will likely occur for construction spending.
Construction spending on new multifamily projects jumped 6.2% during December 2012. Moreover, the initial estimate for November was revised higher from 0.5% to 1.8%, indicating spending activity finished the year strong. Of the three main categories of residential construction, multifamily has experienced the strongest rebound from its cyclical trough. Gains in spending have occurred in each of the last 15 months, with the latest month available representing the second largest percentage increase over this time period. On a year-over-year basis, the level of spending has skyrocketed more than 57% and has gained 97% from the bottom in August 2010.
Remodeling activity improved in December as spending climbed 2.9% from the prior month. Preliminary estimates for October and November were also revised higher, significantly higher in the case of October with a 1.9% decline turning into a 2.3% gain. The 3-month moving average points to a solid upward trend in home improvement spending and closed out 2012 at its highest nominal dollar value since September 2007. NAHB’s Remodeling Market Index (RMI) has offered a similar judgment on recent home improvement activity as the current and future market indicators have achieved their best readings since the first quarter of 2004.
January 3, 2013
Spending on private residential construction activity ticked 0.4% higher on a month-to-month basis during November 2012. October’s preliminary reading of a 3% gain was bumped down to a 1.3% increase, but at the same time the initial estimate for September was pushed upward from 1.1% to 2.9%. Spending has increased in each of the last 8 months (and 15 of the last 16), rising to a 4-year high and nearly 33% above the trough during the third quarter of 2010.
New single-family home construction led the way in terms of spending growth among the private residential categories during November, posting a 1.3% increase versus October. Spending has climbed more than 29% above its nominal level of a year ago and stands 57% higher compared to the trough in mid-2009. A softer reading on single-family housing starts might point to some potential weakness in spending on this category going forward, but a 2-point increase in NAHB’s HMI and another strong reading on permit authorizations point to stronger construction activity (and by extension spending) over the near term.
The multifamily construction sector registered its slowest rate of month-to-month growth in nearly a year, but November’s 0.5% still marked the 14th month in a row spending activity has increased. In the past year, nominal spending on multifamily projects has jumped 46% and stands nearly 83% higher than the low posted in August 2010. Starts of multifamily dwellings have averaged over 250,000 units for the past six months and approached 300,000 during the past two months. The current forecast calls for a modest slowdown in starts during the first quarter that will likely be followed by gains through the end of 2014–a pattern that can be expected for construction spending in this sector.
Spending on home improvements dipped 0.7% in November, adding to the 1.9% contraction (revised downward from a 1.8% gain) reported for October. Expressed as a 3-month average (so as to smooth out monthly volatility), nominal spending on remodeling activity has hovered around a 5-year high for the past few months. NAHB’s Remodeling Market Index (RMI) has pointed to an even stronger assessment of current market conditions by professional remodelers as the RMI reached 50 for the first time since 2005. Our forecast calls for steady gains in remodeling activity through the end of 2014.
December 3, 2012
Private residential construction spending surged 3% on a month-to-month basis in October 2012. The initial estimate for September was revised downward from a 2.8% gain down to a 1.1% rate of growth; however, this was more than offset by an upward bump in the previously reported estimate for August from 1.2% to 2.8%. Following increases in 14 of the last 15 months, nominal spending on private residential construction activity is at its highest dollar value since late 2008. In addition, spending has risen 32% above the trough registered during the third quarter of 2010.
New single-family homes continued to post solid rates of growth, increasing 3.6% on a month-to-month basis for the second month in a row. Spending is also 29% above its year-ago level and has climbed 55% since bottoming out in mid-2009. This latest print on construction spending merely confirms the firming recovery for new single-family home construction that has been observed via housing starts and the HMI. With permit authorizations climbing rapidly and hitting their highest levels since the summer months of 2008, we anticipate this robust pace of growth in construction activity to continue over the near term.
The positive momentum continued for the multifamily sector, notching its 13th consecutive monthly increase with a 6.2% gain over September 2012. Overall, the dollar value of multifamily construction activity has surged more than 82% from its cyclical low observed just two years ago, due in part to strong growth in renter demand. Multifamily starts have averaged better than 230,000 units over the duration of 2012 and given that permits have averaged approximately 280,000 units during the same time period, multifamily construction spending will likely rise further in the coming months.
Home improvement activity expanded 1.8% during October 2012, offsetting the downward revision of a 1.2% decline posted for September. Using the 3-month moving average to iron out some of the volatility in this metric, nominal remodeling spending has reached its highest point in five years. NAHB’s own Remodeling Market Index (RMI) has pointed to an even stronger assessment of current market conditions by professional remodelers as the RMI reached 50 for the first time since 2005.
November 1, 2012
Private residential construction spending jumped 2.8% on a month-to-month basis during September 2012. The preliminary estimates for July and August were revised higher as well, from previous prints of -0.1% and 0.9% to 1.3% and 1.2%, respectively. Nominal spending activity on private residential construction has expanded in 13 of the last 14 months, putting it nearly 21% above September 2011 and at its highest dollar value since the end of 2008.
The new single-family homes spending category saw growth accelerate in September, gaining 3.9% from the previous month and 26% from last year. Save for a one month downward blip in March 2012, construction spending on new single-family housing has increased solidly since last summer and risen more than 50% since hitting rock bottom during the second quarter of 2009. Data sources such as housing starts and NAHB’s own HMI continue to offer evidence that construction of new single-family homes is on the mend and given that building permits are at their highest level since mid-2008, construction activity is expected to rise for the foreseeable future.
Multifamily construction spending registered its 12th consecutive month-to-month increase, gaining 1.3% over August 2012. Although the multifamily sector has posted the largest percentage increase in spending activity compared to its cyclical low (73%), the overall trend in spending growth has slowed in each of the last three months. While this might represent a lull, spending should continue to expand over the near term as multifamily starts have exceeded 200,000 units in 8 of the last 9 months and permits for 5+ units surged to a four-year high in September.
Nominal spending on home improvement activity increased 2%, more than recouping the 1.1% month-to-month drop that was reported in August. While remodeling has bounced around for much of the past two years, the level of spending activity has trended appreciably higher over the past few months and is now sitting at a 4-year high. Indeed, NAHB’s Remodeling Market Index (RMI) indicated professional remodelers’ perceptions of current market conditions are at their highest levels since 2005.
August 1, 2012
According to the Census Bureau, private residential construction spending increased for the third consecutive month in June, gaining 1.3 percent from an upwardly revised estimate for May 2012. The overall trend in private residential construction spending has been quite strong as the data expressed on a three-month moving average basis has risen in each of the last 9 months. With this month’s reading, nominal spending on private residential construction projects has reached its highest point since the beginning of 2009.
Construction spending on new single-family homes jumped 3 percent on a month-to-month basis and has staged nearly a 19 percent improvement from the same period a year ago. Moreover, since bottoming out during the second quarter of 2009, the nominal dollar value of spending on new single-family homes has climbed 38 percent. With both starts and permitting activity for new single-family homes still on the rise, additional gains in spending are expected over the very near term and should carry forward as the forecast calls for the pace of homebuilding activity to gain momentum as the calendar transitions to 2013.
Multifamily construction spending increased 3.4 percent during June and has experienced gains in each of the last 9 months. Overall, spending on new multifamily units has skyrocketed by 66 percent from its low point in August 2010. Construction activity is expected to level out over the remainder of 2012, but we anticipate multifamily starts to remain well above 200,000 through the end of next year. Home improvement spending slipped on a month-to-month basis in June, continuing its see-saw pattern of the last several months. Remodeling activity has remained in a relatively tight range for the past two years, but did provide some degree of stability during the housing market downturn while production of multifamily and single-family units fell rapidly.
July 5, 2012
The Census Bureau’s newest release on construction spending showed a 2.8 percent increase in spending activity for private residential projects in May 2012. On a three-month moving average basis, spending has increased during each of the last 8 months. This release also featured revisions to prior estimates dating back to January 2010. While the modest upswing in total private residential construction activity has been preserved, multifamily construction spending has been expanding at a slightly faster pace than before. Overall, this marks the highest nominal level of residential construction spending since early 2009.
New single-family construction activity expanded for the 12th time in the last 13 months, gaining 1.8 percent versus April and nearly 15 percent from the May 2011 level of spending. Since bottoming out during the second quarter of 2009, spending on new single-family homes has risen more than 33 percent. Although the forecast calls for accelerating growth in homebuilding activity over the next several quarters, a sluggish labor market and tight lending standards are impediments to stronger gains in construction going forward.
As mentioned above, the revisions to historical data produced a modestly stronger recovery for new multifamily construction activity. Nominal spending increased 6.3 percent compared to April and has surged more than 50 percent on a year-over-year basis. Even with an unexpectedly weak reading in May, starts of buildings with 5+ units have averaged 211,000 on an annualized basis since the beginning of the year and permits have averaged 235,000 over the last 7 months. Therefore, new multifamily spending will likely recover further over the course of 2012. Home improvement spending improved for the second consecutive month, increasing 3.6 percent in May, coming on the heels of a 1.5 percent rate of growth in April. Although spending on remodeling held up better than new multifamily and single-family during the housing market downturn, remodeling activity has held within a generally close range since late 2010.
June 4, 2012
Today’s construction spending release from the Census Bureau revealed a strong 2.8 percent jump in spending on private residential projects during April 2012. The initial estimates for February and March were revised from -2.2% and 0.7% to 0.1% and 0.4%, respectively. Overall, private residential construction spending has increased in each of the last 9 months. New single-family construction activity continued its positive momentum in April, rising 1.8 percent from the previous month and expanding on a month-to-month basis in all but one of the past 11 months. In fact, the dollar value of spending on new single-family homes is at its highest level in two years. Although certainly an improvement from the depressed levels of 2009, until 1) the labor market recovery gains any serious traction, 2) lending standards are less stringent and 3) the glut of distressed properties is worked off, gains in homebuilding activity will remain modest.
Multifamily registered the strongest gain of any category during April, notching a 4.1 percent increase over March and a robust 31 percent rate of growth on a year-over-year basis. Apartment demand has picked up over the past few years as the share of newly-formed households entering the rental market has risen appreciably. The rental vacancy rate slid to a nearly decade low and the absorption rate jumped to its highest level since 2005. Starts of 5+ unit structures have stayed above an annualized rate of 200,000 in each of the last three months while building permits have exceeded that level in each of the last six months. Finally, the home improvement component of construction spending proved volatile yet again, gaining 3.7 percent in April after posting a 2.9 percent estimated decline during the previous month. On a 3-month moving average basis, remodeling spending activity has held in a fairly tight range since late 2011, a result that is generally in line with NAHB’s most recent release of the Remodeling Market Index.
May 2, 2012
The Census Bureau’s newest report on construction spending showed a 0.7 percent jump in spending activity on private residential projects in March 2012. Initial estimates for January and February were revised from earlier readings of -0.1% and generally unchanged to an increase of 0.5% and a drop of 2.2%, respectively. The new single-family component for construction spending gained 3.8 percent in March, which more than offset the 1.3 percent decline that occurred in February. On a 3-month moving average basis, however, spending has increased in each of the last 9 months and is now 23 percent above its cyclical low observed in mid-2009. While an improvement, and with more room on the upside given that recent data on building permits point to additional growth in homebuilding activity, still-tight mortgage lending standards and large volumes of distressed properties in many markets are expected to limit gains over the near term.
New multifamily construction fell 3.1 percent in March, though February’s initial estimate was revised higher from a 2 percent gain to a solid 3.6 percent increase. The overall trend in multifamily construction spending remains positive, as this sector has increased in each of the last 12 months when viewed on a 3-month moving average basis. Demand for multifamily units has recovered noticeably in recent quarters as the rental vacancy rate recently fell to its lowest point in more than a decade and the absorption rate surged to its highest level since 2005. Permits authorized for 5+ unit dwellings have averaged approximately 220,000 annualized units during the past six months, which suggests continued strength for spending on new apartment buildings. The home improvement component of construction spending slumped for the fourth consecutive month, declining 1.9 percent.
Total construction spending registered a very modest 0.1 percent gain from February as the gains in private residential and private nonresidential were offset by another weak reading on public sector construction spending. Office buildings and manufacturing facilities accounted for the bulk of March’s improvement for the nonres sector, but the level of spending on office buildings remains low as vacancy rates remain just below their cyclical peaks. The power and manufacturing sectors have been the key sources of support for nonresidential construction activity over the past year. Public sector construction outlays fell 1.1 percent in March, with weaker readings for all the major categories. On a year-to-date basis, public sector outlays on construction have declined 2.6 percent.
April 3, 2012
The Census Bureau reported that private residential construction spending was essentially unchanged between January and February 2012. However, the initial readings for December and January were revised appreciably lower, respectively, to an increase of 0.4% and a slight decline in spending of -0.1% (versus previous estimates of 1.5% and 1.8%). In concert with other indicators such as new housing starts, construction spending on new single-family homes slipped 1.5% in February after posting 8 consecutive months of gains in spending activity. Since bottoming out in May 2009, nominal spending levels on new single family homes have increased 22.4%, but a weak (albeit improving) labor market, tight mortgage lending standards and competition from distressed property sales have weighed heavily on demand and will likely dampen upside potential over the near term.
Construction spending on new multifamily housing increased 2% in February, which itself came on the heels of a 2.6% increase (revised higher from 0.7%) during January. The multifamily housing sector has experienced a solid rebound on the supply side over the past year, with vacancy rates falling even as apartment construction activity has trended appreciably higher. Starts of buildings with 5+ units have averaged nearly 200,000 units over the past 6 months and a pipeline at least this large is expected to continue over the near term as permits authorized for 5+ unit dwellings have stayed above 200,000 annualized units in each of the last four months. Spending on remodeling fell for the second consecutive month (January’s initial estimate was revised downward from a 1.3% gain to a 2.6% drop), but this category has held in a range around an annualized rate of $115 billion for nearly two years. In addition, attesting to its performance relative to new home construction, spending on home improvement activities has exceeded the level reported for new single-family home construction in 16 of the last 17 months.
Despite the steady reading for private residential, overall construction spending was pulled lower by private nonresidential spending and public sector outlays. The power sector saw the level of spending fall for the second consecutive month after experiencing sharp increases in spending throughout much of 2011 due to the commencement of several new large power plants and transmission lines projects. New manufacturing plant construction continued to climb higher in February, reflecting a blend of broad industry-wide improvements and several large-scale construction projects coming on line. Spending on commercial, office and lodging construction projects continued to bounce along the bottom in February. Public sector construction outlays fell 1.7% in February, but on a year-to-date basis spending is down only slightly compared to 2011.