Housing and the September 2009 New Residential Construction Report

According to the U.S. Census Bureau and the Department of Housing and Urban Development, single family housing permits indicate that future construction activity will fall 28% nationally as compared to September 2008. The data also predicts a huge 74% drop since construction peaked in January 2006. Economists generally agree that annual demand for new housing units is somewhere around 1.8 million. Some economists say that 2 million units are required annually, while others think that the actual demand 1.5 million is. Here's part of how they come up with these numbers. The primary drivers of housing unit demand are new household formation and housing unit destruction. We regularly hear that new households, on average, form at a rate of 850,000 per year. Housing destruction is composed primarily of units destroyed by fire, flood, natural disaster and urban renewal, and is generally considered to be around 750,000 units per year. Fires alone account for almost 450,000 homes destroyed annually. Just watch the news any evening in Atlanta, and you are likely to see or hear about apartment or house fires. Adding just these two demand measures yields a 1,600,000 annual unit demand.



As the U.S. population has continues to rise, just as it has for the last 50 years, new housholds should be forming. For the last three years, new households have not been forming at a normal rate. Single people are moving in with each other, young adults are returning to live with their parents, and immigrants are entering the country at a much slower rate. Housing units, however, continue to be destroyed on a ongoing basis. This year alone, more housing units were destroyed by the floods in the Atlanta Metro Area this year than were permitted through September. Subtract the additional units destroyed by fires (usually the largest part of the destroyed number) and urban renewal, and Atlanta should be with a shortage in housing units. Just as over the last 50 years housing has been cyclical with booms and busts occuring irregularly, we may be setting up for another housing boom, when the next generation begins to form households and destroyed units are replaced.

Home Prices in the US Clearly Headed in Right Direction, Lumber Prices a Little Higher

Here is some more good news for consumers and for the housing market - home prices in the Case-Schiller S&P Home Price Index increased in July by the most in nearly 4 years. Prices climbed in 18 of the 2o major cities in the index.
CME lumber ends little higher nearby in quiet trade
Chicago Mercantile Exchange lumber futures closed mostly a little higher on Monday amid thin short covering.
Cash lumber & building material prices in the Atlanta - Athens Georgia area showed little change.

Floods Damage & Destroy Thousands of Homes in Georgia, Lumber and Building Materials Needed For Rebuilding

As a result of flooding from torrential rains, thousands of homes and businesses in Georgia, hundreds in Atlanta alone, suffered some level of damage or were destroyed. 114 homes in the city of Atlanta alone were destroyed by the floods, with many more damaged or destroyed in suburban and rural areas. More homes were destroyed than have been built this year. Athens had more flooding rains over the weekend.
There are fewer new homes for sale than there have been since march of 1983, and there are far fewer existing homes for sale in Atlanta than there has been in several years. As homes are rebuilt and repaired, there will be a greater demand for lumber and building materials. If we use more green home building products for new construction, repair and home improvement, we will make the world we live in a better place.

New Home Sales approach 1 Year High, Lumber Futures Fall, Atlanta Flood Update

Higher numbers in the New Home Sales report were expected by lumber traders:
CME lumber ends lower amid underlying cash weakness
November lumber closed down $4.80 at $169.10 per thousand board feet and January off $2.90 at $193.10. Both months posted 2-1/2-week lows.
New home sales climbed 0.7% to 429,000, according to data released last Friday. The available supply of new homes for sale dropped to 262,000, the lowest number in over 26 years. This represents a supply of 7.3 months at the current sales rate.
Atlanta, Athens and North Georgia are expecting more rain this weekend. Fourteen counties are now eligible for FEMA disaster assistance.
Atlanta flood update: More FEMA relief, flash flood watch
Building materials are still in adequate supply, with only spot shortages of some items.