July New Residential Construction Commentary

The above graph is a visual representation of the Seasonally Adjusted New Residential Construction & Sales data through July 2009. The lines represent Total Permits and Starts, Single Family Permits and Starts, Single Family Units Sold, Total Under Construction and Single Family Under Construction. The trend line represents a 50 year regression analysis of Single Family Starts. It is worth noting that there have been several construction downturns since 1959, and that we have surpassed levels that have triggered recovery in all of the past housing downturns.




Looking at Single Family Starts and Permits, we see that the inflection point occurred somewhere between January and March of 2009. We did not see a significant increase in the Atlanta – Athens area until later in the spring. Lumber and Panel prices have risen above the lows that were at or below sustainable levels, although lumber, plywood, and OSB mills continue to curtail or shut down completely.

The quantity of Single Family Homes for Sale is the lowest it has been since April, 1993.
“The median sales price of new houses sold in July 2009 was $210,100; the average sales price was $269,200. The seasonally adjusted estimate of new houses for sale at the end of July was 271,000. This represents a supply of 7.5 months at the current sales rate.” Source: U.S. Census Bureau, NEW RESIDENTIAL SALES IN JULY 2009.
As the supply of new homes continues to drop, new homes will need to be built to replenish the supply. This will require new jobs to be added in the construction industry, which should help lower unemployment, and contribute to a new cycle of prosperity in our U.S. economy.

Capacity for single family residential construction has fallen as builders, building material product suppliers, and lumber and panel mills downsized or shutdown completely. This is good news for any lumber mill, lumber yard, building material supply, and builder left standing in the market.

Reid Adams
http://www.coferadams.com/
Cofer Adams Building Center, Inc. is a full service building material supply of structural and related building products for residential new construction in the Atlanta – Athens Georgia area. We provide prefabricated components, including floor trusses, roof trusses, and engineered wood; wood and vinyl windows; and pre-hung interior and exterior doors, as well as assemble and distributes interior and exterior door units. We also offer lumber and wood sheet goods comprising dimensional lumber, plywood, and oriented strand board products used in on-site house and commercial framing; millwork products, which consist of interior trim, exterior trim, columns, and posts; and other building products that include gypsum, roofing, and insulation.