Construction Job Openings Cool at the Start of 2014

April 8, 2014

The number of open, unfilled construction sector jobs declined at the start of 2014, according to the BLS Job Openings and Labor Turnover Survey (JOLTS). While the February open rate is the fifth highest since the end of the recession, the count of open construction jobs fell during a period when unseasonably cold weather took a toll on numerous parts of the economy.

For the construction sector, monthly gross hiring declined slightly, falling on a seasonally adjusted basis from 281,000 to 273,000 from January to February. Over the same period, the hiring rate, as measured on a 3-month moving average basis, fell from 4.7% to 4.5%.

JOLTS_Feb 2014 data

Measured as a three-month moving average, the construction openings rate (the blue line above) has declined since December, inclusive of a significant downward revision for the preliminary January data. As of February 2014, the three-month moving average stood at 2%, a rate higher than any data reporting prior to October 2013 but lower than the December 2013 peak of 2.33%.

Two other changes in the construction sector are worth noting. First, the layoff rate for the sector (graphed above as a 12-month moving average) has continued to fall. Second, the sector hiring rate has fallen noticeably since the fall of 2013. The trend lines over the last two years – a falling hiring rate, an increasing opening rate, and a declining layoff rate – are consistent with some construction firms having trouble contracting with workers for specific projects. However, future employment reports will indicate whether recent hiring weakness is mostly due to weather effects or reflects new baselines for construction activity.

Monthly employment data for March 2014 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that total employment in home building stands at 2.242 million, broken down as 650,000 builders and 1.592 million residential specialty trade contractors.

res construction employment

According to the BLS data, over the last year the home building sector has added 103,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 257,500 positions have been added to the residential construction sector. As of March, over the last six months the home building and remodeling industry has added on average more than 10,000 jobs per month.

For the economy as a whole, the February JOLTS data indicate that the hiring rate was constant at 3.3% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The current overall job openings rate (2.9%) has been in the 2.7% to 2.9% range since the start of 2013.

Metropolitan Markets Improve Slightly

April 7, 2014

The April NAHB/First American Leading Market Index rose one point to .88 from .87 in March. The index measures how close individual markets and the US market are relative to their last normal market activity. A total of 153 markets or about half of all markets were at or above the national index and 59 markets’ indexes were at or above one, meaning those markets had met or exceeded the last period of normal market activity.

The index measures single-family permits, home prices and employment in the past 12 months and divides that by the last normal annual level. For permits and prices, the last normal period is 2000-2003 and for employment 2007.

The index has been moving steadily upward for two years from a low of .78 in April 2012. At the same time, the number of markets at or above their last normal level of activity increased from 34, with 19 in energy producing states, to 59, with 30 in energy producing states (Texas, Louisiana, Montana, North Dakota, Oklahoma and Wyoming). The slight broadening into states with other economic bases is consistent with broader economic growth in the US.

Most markets (308 or 88%) have seen a recovery back to normal in home prices but employment lags,; 40 markets or 11% are back or above normal employment levels. Housing is even further behind; only 24 markets or 7% are back to or above normal levels of single-family permit issuance.

LMI April

Residential Construction Employment Up 9,100 in March

April 4, 2014

Solid job growth for home builders and remodelers was recorded in March, according to data from the Bureau of Labor Statistics (BLS). The residential construction industry added 9,100 jobs for the month on a seasonally adjusted basis, 3,100 working for builders and 6,000 residential specialty trade contractors.

res constr employment


Total industry employment now stands at 2.242 million, broken down as approximately 650,000 builders and 1.592 million residential contractors. For 2014, the residential building industry has been averaging 10,000 jobs created per month. Over the last year, 103,000 jobs were created, and the home building workforce has gained 257,500 jobs since the post-recession low point set in January 2011.

home building employment share

Over the last year and a half, the share of jobs being created by the sector has outpaced the share of industry employment. For example, in March 2014, industry employment represented 1.63% of total nonfarm jobs. However, residential building was responsible for 4.74% of total jobs created. Home building typically provides an outsized boost to economic growth and job creation as a recession ends. In the last year or two, home building has finally assumed this typical economic role.

Overall, the establishment survey from the BLS indicated that 192,000 jobs were created on a seasonally adjusted basis in March. This was slightly below expectations, but on net a positive indicator for the economy. Previous months reporting was also revised up by 37,000 jobs.

The March data is also consistent with the claim that unseasonably cold weather in much of the U.S. held back economic growth during the end of 2013 and the start of the new year.

The separate household survey reported that the unemployment rate held steady in March at 6.7%. In a positive sign for household formations and housing demand, the labor force participation rate increased 0.2 percentage points to 63.2%. The size of the labor force increased by 503,000 in March.


What Home Buyers Really Want: Ethnic Preferences (Part IV)

April 3, 2014

Previous posts highlighting findings from the study What Home Buyers Really Want: Ethnic Preferences have shown how housing preferences may – or may not – be affected by the racial background of the home buyer. One aspect of the home where race/ethnicity does not play a significant role is energy efficiency – a top priority across the board for all groups analyzed.

Data in the graph below show that buyers of all backgrounds will not really be moved to pay more money for a home simply to help the environment in some broad and vague sense: over 65 percent of all groups report wanting an “environment-friendly” home, but are not willing to pay more for it. Only small minorities of 15 percent or less would actually pay more just to be friendly to the environment.


However, when the question is phrased more specifically in terms of energy efficiency, and the impact that such features can have on utility bills, home buyers show they care a lot. When faced with a trade-off choice between having a highly energy efficient home with lower utility bills over the life of the home vs. one without those features that costs 2% to 3% less, over 80 percent of buyers of all backgrounds prefer the more expensive home that includes the energy saving features.


Further evidence of this strong desire for energy efficiency is found in the graph below.  Home buyers were asked how important a consideration it would be to have low utility costs when choosing their next home.  Strong majorities of White, African-American, Hispanic, and Asians buyers (over 80 percent) agree that low utility costs will be important to very important when making that decision.


Knowing that buyers are willing to pay for energy efficiency features so long as that translates into lower utility bills leads to the question of how much more are buyers willing to pay, beyond the original price of the home, in order to save say $1,000 a year in utility costs?  The answer is an average of $6,774 among White buyers, $7,578 among African-American buyers, $9,146 among Hispanic buyers, and $8,251 among Asian buyers.  The latter amounts suggest buyers expect fairly steep rates of return for the money they invest in energy efficiency – somewhere between 10.9 percent and 14.8 percent.



Eye on the Economy: Existing Home Sales Down, New Home Sales Flat

April 2, 2014

In many parts of the country, spring began with winter-like conditions persisting. Without a doubt, unseasonably cold temperatures reduced economic activity during the first quarter of 2014, including home sales and construction. However, housing demand also weakened due to recent changes on the demand side of the market. Such changes can be seen in the contrasting data concerning new and existing home sales.

EOE gaph_Apr 2

New home sales remained effectively flat for the first two months of the year. According to the Census Bureau and HUD, new home sales declined 3.3% in February, yet the January-February average sales pace was approximately the same as the fourth-quarter 2013 seasonally adjusted annual rate of 447,000. New home inventories are rising in anticipation of a better spring, up 3,000 homes in February compared to December.

In contrast to new homes, existing home sales experienced a significant decline in recent months. Since July 2013, the pace of new home sales increased 18%, while existing single-family home sales declined 15%. February existing home sales, according to the National Association of Realtors (NAR), were down 0.4% for the month and off 7.1% from a year ago.

Aside from weather factors, part of the recent decline is due to a slackening of volume in distressed sales, which are off from 25% of the market a year ago to 16% in February. All-cash sales continue to play a dominant role in the existing home market (35% of transactions), while the first-time home buyer share rose from 26% in January to 28% in February.

This weakness in existing home sales can be expected to continue. The NAR Pending Home Sales Index — a useful indicator of future sales volume — decreased 0.8% in February, marking eight straight months of decline.

Despite these declines, home prices are rising, albeit at a slowing rate. For example, January’s Case-Shiller 20-city index showed a 0.8% monthly increase, marking the 23rd monthly increase. Consumer confidence indicators continue to show high levels of interest in purchasing a new home, although overall levels of sentiment have been mixed due in part to recent weather impacts.

The softness in recent housing data also appeared in construction spending data from the Census Bureau. Total private residential construction spending declined in February after three consecutive months of increase. The reading was down 0.8% from January, but still 13.5% higher than a year ago. Month-over-month single-family spending decreased by 1.1%, while the home improvement category decreased by 1.3%. Multifamily construction rebounded from a drop in January with a strong month-over-month increase of 2.6%.

In analysis news, NAHB continued its review of home buyer preferences, with new survey data indicating ethnic differences in preferences for items like kitchens and bathrooms. And NAHB economists used American Community Survey data to track the top metro areas by single-family housing market share and lowest home owner vacancy rates.

In tax analysis, NAHB reported that property taxes continue to be the primary revenue source for state and local governments. And new IRS data shows that the volume of remodeling activity generated by the 25C tax credit experienced a significant drop after 2010 policy changes.

A Frigid February Catches up to Construction Spending

April 1, 2014

Total private residential construction spending decreased in February after three consecutive months of growth. The unusually cold winter may have finally caught up to total residential spending and contributed to a slight month-over-month decline. Total private residential construction spending dropped to a seasonally adjusted annual rate of $360.4 billion according to the latest Census estimates. The current reading is a decrease of 0.8% from the revised January estimate, but 13.5% higher than one year ago.

Month-over-month single-family spending decreased by 1.1% as there was some weakness in the value of housing units started. The home improvement category decreased by 1.3%. Multifamily construction rebounded from a drop in January with a strong month-over-month increase of 2.6%.


The figures show significant improvements in residential construction spending for all categories from the prior year. From February 2013, on a 3-month moving average basis, construction spending in single-family increased by 18.3%, multifamily increased by 29.9%, and remodeling increased by 11.1%.

Although housing starts were down slightly in February, less weather-dependent permits were up almost 8% to 1,018,000. As the weather improves construction spending should pick up provided key supply chain issues, which remain a concern for many builders, do not restrict growth.

Top Metro Areas – Single-Family Detached Concentration

March 31, 2014

In a recent study, NAHB examines eight key housing statistics from the 2012 American Community Survey (ACS). This post takes a closer look at one of those statistics; the share of homeowners living in single-family detached housing.

The share of homeowners living in single-family detached housing is calculated by taking the total number of single-family detached units divided by the total number of owner-occupied units. The figure gives a snapshot of the housing stock for a specified geography.

The metropolitan area with the highest share of homeowners living in single-family detached housing is Wausau, WI with 96.2%. The national share of homeowners living in single-family detached housing is 82.3%.

With the exception of Modesto, CA, all of the metropolitan areas in the top ten are located in the Midwest. All metropolitan areas in the top ten have median home values below the national figure. The median value of owner-occupied housing units for the entire United States in 2012 was $171,900.


Four of the ten areas with the lowest share of homeowners living in single-family detached housing are located in Florida. In general, metropolitan areas with low shares of homeowners living in single-family detached housing are also densely populated.

The metropolitan area with the lowest share of homeowners living in single-family detached housing is the New York-White Plains-Wayne (New York) metro division. The New York metro division is the most populous at nearly 12 million.



  • The complete series is provided below.
  1. Eye on Housing – Top Ten Metro Areas – Owner Occupied Housing Units
  2. Eye on Housing – Top Ten Metro Areas – Homeownership Rate
  3. Eye on Housing – Top Ten Metro Areas – Vacancy Rates
  4. Eye on Housing – Top Ten Metro Areas – Single-Family Concentration
  5. Eye on Housing – Top Ten Metro Areas – Median Income and Home Value
  6. Eye on Housing – Top Ten Metro Areas – New Construction

Measures of Consumer Confidence Mixed – Again

March 28, 2014

March was another month of mixed results for consumer confidence. The Consumer Confidence Index increased after a falling in February. The Consumer Sentiment Index fell after increasing in February.

According to the Conference Board the Consumer Confidence Index jumped 4.0 points on a month-over-month seasonally adjusted basis in to 82.3. The rebound from February was attributed to improved expectations for economic conditions in the short-term. Consumers were more upbeat about jobs and the overall economy conditions, but remain less optimistic about income growth. Income growth remains a challenge for the housing industry moving forward, especially for first-time home buyers.

According to Thomson Reuters and the University of Michigan, the Consumer Sentiment Index fell in March by 1.6 points from the prior month. The drop was attributed to softening of the long-term economic outlook by consumers.


According to the Conference Board, the share of consumers planning to buy a home in the next 6 months was 5.5% on a seasonally adjusted 3-month moving average basis. The share of respondents planning to purchase a “lived-in” home was 3.4% on a seasonally adjusted 3-month moving average basis. The share of respondents planning to purchase a new home was 1.3% on a seasonally adjusted 3-month moving average basis. All measures were down from the prior month, but an improvement over one year ago.


An unusually cold winter may have attributed to another month of mixed result in measures of consumer confidence. However, unanswered questions remain about consumer confidence as it pertains to the housing market. In the upcoming year, interest rates and income growth will play an important role not only in the housing sector but also in the broader economic recovery.

What Home Buyers Really Want: Ethnic Preferences (Part III)

March 28, 2014

Previous posts highlighting findings from the study What Home Buyers Really Want: Ethnic Preferences have shown that a buyer’s race or ethnicity can play a role in how he/she evaluates the characteristics and features of a prospective home. The analysis was focused on four racial/ethnic groups of home buyers:

  • White (Non-Hispanic),
  • African-American (non-Hispanic),
  • Hispanic, and
  • Asian.

Based on a list of almost 30 kitchen features that buyers got to rate as essential, desirable, indifferent, or ‘do not want’, the table below shows the 10 ‘most wanted’ kitchen features for each of the four racial/ethnic groups. Interestingly, the features that make it on this ‘most wanted’ kitchen list are identical across the four groups, albeit in different order. In fact, the top three are exactly the same among all groups (in slightly different order):

  • Table space for eating
  • Walk-in pantry
  • Double sink

Other features that appear in all four groups’ ‘most wanted’ kitchen lists include a central island, granite countertops, recessed lighting and a desk/computer area.



A similar list of the top 5 ‘most wanted’ bathroom features (out of more than 15 such features buyers were asked to rate) shows that 4 of these 5 are also common across all racial/ethnic backgrounds:

  • Exhaust fan
  • Linen closet
  • Both a shower stall and a tub in master bathroom
  • Double vanity



When it comes to technology, the one feature that White, African-American, Hispanic, and Asian buyers alike most would like to have in their next home is a wireless home security system, ranked most wanted by all four groups out of more than 20 technology features listed. This result suggests that including a security system may be a strong selling point across all backgrounds.   In addition to the wireless home security system, three other features appear on the top 5 ‘most wanted’ tech list of all four groups:

  • Programmable thermostat
  • Security cameras
  • Wireless home audio system




The next and final post on this series based on the study What Home Buyers Really Want: Ethnic Preferences will report on buyers’ attitudes toward the environment and their willingness to pay more for a home that saves them $1,000 a year in utility costs.

Pending Sales Down

March 27, 2014

The Pending Home Sales Index (PHSI), a forward-looking indicator based on signed contracts, decreased 0.8% in February to 93.9 from a downwardly revised January level of 94.7. The PHSI now has declined eight straight months, and is at the lowest level since the 92.2 reported in October 2011. The February 2014 PHSI reported by the National Association of Realtors (NAR) was 10.5% lower than the same period a year ago.
Pending Home Sales February 2014


The February PHSI increased in the Midwest and West by 2.8% and 2.3% respectively, and fell in the Northeast and South by 2.4% and 4.0% respectively. All regions fell year-over-year, ranging from 7.4% in the Northeast to 16.5% in the West.

Two days ago Census reported a 3.3% decrease in February new home sales. For the second consecutive month, the unusually severe winter has slowed the housing market. However, the growth in household formations and strong pent-up demand will move the market forward later this year. The downward slide in the PHSI indicates existing home sales will remain flat over the next two months.


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