Are Building Material Prices Still Up?

The overall building material prices are down from summer prices except for the prices of ready-mix concrete.  In fact, the price of ready-mix concrete is rapidly rising.  The largest decline seen was in softwood lumber and steel mill prices.  Gypsum prices are still high over 20% from the same time last year.

Prices of building materials saw a 0.3% decrease in September according to the Producer Price Index (PPI). There was also a decline in the PPI for goods input to residential construction (including energy) for the third consecutive month in September.

Gypsum, which is used in drywall, is also an ingredient used in ready-mix concrete.  High demand for cement combined with lower imports of aggregate due to a large quarry shutdown in Mexico have spread thin the supply of domestically produced ready-mix concrete as well as gypsum.   Even though single-family house building is has slowed a little, concrete prices are still rising because it is used for many other applications outside of residential construction. Ready-mix saw a PPI increase of 1.4% this fall which marks the sixth consecutive increase.  This is the largest year-to-date increase in the index’s 34-year history.

Softwood lumber’s  PPI declined 2.9% this fall but the prices are still 14.5% higher than a year ago.  Steel Mill products saw a decrease of 6.7% this fall and have dropped 16.1% over the past four months.  In fact, the index is the lowest it has been since June 2021 which is still double the price that the steel mill was before COVID-19.

Home prices have decreased since last June 2021 2.3% which was reported to be the largest three-month drop since April 2020.  The small decline has happened during high prices on materials though.  In the South, there is a 2.6% increase, a 0.7% decrease in the Northeast, a 0.3% increase in the West and prices stayed the same in the Midwest.

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A Rise In Home Building In Rural Markets

The National Home Builders Association (NAHB) has seen a new housing trend with the COVID-19 pandemic. The latest quarterly NAHB Home Building Geography Index (HBGI) found that residential construction is growing faster in lower density markets.

“We expect the virus could affect future housing preferences for those currently living in the hardest-hit, high-density environments like central cities and that housing demand will continue to increase in medium- and low-density communities,” said NAHB Chairman Dean Mon.

“The first quarter HBGI data reveals that construction growth expanded over the last year more quickly in low population density areas than high-density regions,” said NAHB Chief Economist

Robert Dietz. “This trend will continue as households seek out single-family homes further from urban cores, particularly as telecommuting continues in greater numbers.”

The report reveals that proximity and affordability were two of the biggest catalyst in the shift. People are now second-guessing living in metropolitan areas after the public health crisis hit. During the COVID-19 pandemic, metro residents were more vulnerable because of the crowded living conditions, mass transit, insufficient health and public sector infrastructure. Builders are starting to look outside of metropolitan areas where the land is cheaper and there are more building opportunities.

“The HBGI data is consistent with the fact that housing costs are increasing fastest in large metro suburban counties and smaller metro areas with populations under 1 million where demand for housing is high but supply constraints are tight,” said NAHB Chief Economist Robert Dietz.

“Supply-side issues that are hurting affordability and raising costs for builders include excessive regulations, labor shortages, rising material costs and a dearth of buildable lots in mid- to high population centers.”

All national economic geographies in the country showed a 9.1% growth increase in the suburbs over a one-year moving average. In the education and health services sector (EHS), 4% made up the total single construction and made up close to twice the growth rate in the multifamily construction over the past year. The HBGI also found that the education and health services sector was the top quartile of counties and totaled 25.7% above the total employment sectors.

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Private Residential Construction Spending Still on the Rise

Decreasing mortgage rates along with solid growth of spending on single-family construction and remodeling have kept the private residential construction up for the sixth consecutive month. According to the National Association of Home Builders, the Census Constructions Spending data reveal a 1.4% increase to a seasonally adjusted annual rate of $540.7 billion for total private residential construction spending this last December.

The National Association of Home Builders provides a monthly estimate of the total dollar value of construction work done called The Value of Construction Put in Place Survey (VIP). On the first day of each month data collection and estimation activities begin for the month. The data that is recorded includes the cost of labor and materials, cost of architectural and engineering work, overhead costs,

interest and taxes paid during construction, and contractor’s profits. The survey is based on construction work that is done each month on improvements to existing structures or new structures for private and public sectors.

The growth in spending on single-family construction and remodeling has been great for the housing industry. Single-family spending was up 2.7% in December 2019 at an annual pace of $289.3 billion. This was 5.2% higher compared to the figures reported in December 2018. The figures included in the private residential improvements were based on spending on remodeling, major replacements, and additions to owner-occupied housing units. In December the figures rose to a seasonally adjusted annual rate of $193.7 billion.

In the second half of 2019, as seen in the graph, there has been solid growth in single-family construction and home improvement. Also shown is new multifamily construction spending which slowed down since last summer but did see solid growth from 2010 to 2016 and a growth spurt from late 2018 to early 2019.

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A 4.1% Rise From November 2018 In Construction Spending

The Census Bureau reported the November 2019 U.S. spending rate for U.S. construction is 4.1% above 2018’s rate for last November. According to the report construction spending amounted to a seasonally adjusted annual rate of $1.324 trillion.

Out of the total construction spending, spending on private construction was 1.6% above November

2018’s and is at a seasonally adjusted annual rate of $985.5 billion. Residential construction spending came in at a seasonally adjusted annual rate of $536.1 in November making it 2.7% up from a year ago.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said. “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.

Homebuilders are confident in the current housing market. The National Association of Home Builders and Wells Fargo suggest the sentiment levels are at 70 points making the rate the second-highest level in 2019. The points are 10 points higher than reported this time in 2018.

The positive housing market is expected to continue in 2020. This forecast is based upon the number of applications for new building permits which were at the highest level in November 2019 than they have been in a decade.

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Job Growth and Lower Mortgage Rates Boosting Single-Family Housing

This year the housing industry has been on an uphill victory. According to NAHB Chief Economist Robert Dietz newsletter, Eye on the Economy, there are two main factors that are helping the single-family housing sector.

Job growth has been on a positive path in 2019. It is reported that there is a historically low unemployment rate at 3.7%. In June 2019 there were 224,000 jobs added to the country’s workforce.

The first six month of the year saw an average of 172,000 new jobs per month.

In the residential construction industry alone the increase was 21,000 jobs in June. The average for the first six month of the year in residential construction stands at 5,800 per month. Since the recession, there have been a total of 923,800 positions added in residential construction.

Also to aid in the booming housing industry is lower mortgage rates. Freddie Mac reports that the averaging 30-year fixed-rate is 3.8%. This is the fifth straight month that mortgage rates have fallen making this one of the best times to finance a home.

A recent industry survey shows that the mortgage loan applications for both purchase and refinance surged in the first week of June 2019.

In the most recent survey put out by the Freddie Mac’s research team it states that this “will help sustain the momentum in the housing market in 2019.”

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Interesting History of the Bank Building in Old Mandeville

The Candy Bank, located in Mandeville at the corner of Claiborne and Carroll Street, famous slogan is “Put Your Money Where Your Mouth Is!” This sweet filled store sells candy and ice cream and is owned by Thomas and Lisa Keiffer. Why they chose this catchy phrase can be explained by the history of this well-known Old Mandeville landmark.

St. Tammany Banking Company and Savings Bank was founded in 1905. The first president and one

of its founders was Harvey E. Ellis.  The bank opened a branch in Mandeville and was the first tenant to occupy the building in 1907.  The company opened its doors with $5000 in stock on January 1, 1907.

The building was built in the Beaux Arts style that was popular from 1880 to the 1920’s and was not only the largest building around but also the sturdiest.  Along with its decorative touches such as a gable roof with exposed rafters and intricate cornices, the building was built like a “German Bunker.”  Locals knew this was the place to go when inclement weather was upon them. “The old vault is the place to go,” said current owner Thomas Keiffer. A well-known 20th century author Arthemise Goertz refers to the large bank building in her novel, “New Heaven, New Earth.” The main character, Dr. Victor duRocher, declares: “When the fences go, we must go too. We must get out. We must go to the bank building.”

With the change in the commercial corridor of Old Mandeville from Carroll Street to Girod Street the bank building has since housed many different tenants and businesses. The building has been a previous owner’s residence, a legal office, a medical office, a photography studio, a pet supply store and a coffee house. Many Mandeville residents even remember when the building was part of Windhaven Antiques owned by Ms. Dale Gale. Luckily this old historical landmark has kept up with the times and has held its purpose.

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St. Tammany Parish Homeowners & Businesses Receive Financial Relief

Good news for St. Tammany Parish homeowners and business owners is that they won’t have to “jump through hoops” in order to get their repair and renovation construction off the ground following the historic flood that hit Covington, Louisiana, inundating the city with water from 3

different river sources and shutting down roads and businesses for several days.  The City of Covington has waived the requirement for building permit fees under an ordinance approved by the City Council.

Mayor Mike Cooper said most of the floodwaters had receded by Tuesday and residents were in clean up mode.
“Things are moving,” Cooper said. “The city is doing what it can to help.”

With 100 total structures and counting being reported with flood damage, not only would the fees and requirements be cost prohibitive to the city, but they would hold up the restoration of people’s homes and businesses which would only cause the city to suffer because of the lack of production.

In order to assist homeowners with their repairs, the city is also requiring any contractor or builder working on a flood damaged home who applies for a permit to be a state licensed contractor.  This

should reduce the amount of fraud that happens when huge storms cause damage in the Greater New Orleans area.  Because state licensing requires proof of general liability insurance, homeowners can also breathe easy while the contractor or builder is working on their home.

The main culprits of the flooding were the Bogue Falaya and Little Tchefuncte Rivers in northern Covington.  One of the storm’s casualties was the Bogue Falaya Park in downtown Covington, which will be closed until further notice until the repairs to the wooden pavilion and playground equipment can be done.  St. Tammany Parish is applying for disaster relief for the storm that brought so much damage and it is the mayor of Covington’s hope that this funding will be made available to Covington’s residents who need it.  Parish-wide, so far it has been counted that 615 structures received flood damage in St. Tammany Parish.


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Home Buyers Seeing Upward Trends in Real Estate

During the first month of the year 2016, home buyers have a lot to be excited about when considering buying a new home for sale.  Home pricing, consumer confidence, and home construction starts and permits are all up!  The housing market has been seeing a steady incline since it bottomed out between 2009 and 2011.  With sharp, record-breaking price increases in 2012 and 2013, the housing market almost seemed to be expanding too fast for consumer demand, consumer affordability, and consumer credit.  However, home pricing trends have “flattened” in 2014 and 2015 creating stability in the real estate market.
During the month of October, 2015, home prices rose at 6% and 11% depending on which report buyers were seeing.  The Case Shiller (CS) National Home Price Index released by S&P Dow Jones Indices showed an 11% increase in October while the more conservative Home Price Index from the Federal Housing Finance Agency (FHFA) rose 6%.  Either way, home pricing has stabilized and is on the upswing which is good for both buyers (a smart investment) and sellers.

Meanwhile, the vote of confidence from consumers showed an increase of approximately 4 points in December after 2 months of declining numbers.  The Consumer Confidence Index by the Conference Board rose from 92.6 to 96.5 from November to December.  The index shows that consumer confidence is growing back to pre-Recession levels.

Finally, construction housing starts and permits for 2015 were up 10.8% year-over-year to equal to 1.11 million.  Single-family home starts were up 10.4% and multi-family housing starts were up 11.4%.  The single-family home starts numbers came to 715,300.  Increases were seen in all 4 reported regions of the United States for single-family homes.  Housing permits were also up compared to 2014 by 12% with a total of 1.18 million.  Single-family home permits were up by 7.9%, and multi-family home permits were up by 11.4%.  In December, single-family home permit numbers were up by 1.8% compared to November as well.

All signs point to a solidly recovering housing market nationwide, and here in St. Tammany Parish, the custom home business is thriving with many new exciting projects for 2016.  If you are interested in building or buying a new, custom home, Contact Us at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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Bathroom Remodeling – Available in All Project Sizes

Remodeling a guest bathroom or master bathroom can change the entire look and usage of the room.  It can also change the functionality of the bathroom itself as well as the resale value of the house  Bathroom remodeling is one of the most popular choices of renovation projects that homeowners choose.  Nationally, today’s average price to remodel a bathroom ranges from $5,000 – $15,000, and some people spend as much as $20,000 on a bathroom remodel to create an oasis or paradise right inside their own home.

Whatever price you are able or willing to pay to transform your bathroom into a fully restored new room, there are many considerations of materials and projects to consider when beginning your renovation project.  One of the big considerations is to repair and refinish vs. replace the fixtures in your bathroom.  Fixtures can include lighting fixtures, plumbing fixtures, and carpentry fixtures such as cabinets and countertops.  If you need to stay within a tight budget, you might consider replacing faucets and sinks and then stripping and refinishing cabinets vs. tearing out and replacing the entire cabinet.  If you have a more flexible budget, and you decide to tear out and replace; you may also want to consider changing the floorplan of the bathroom to expand it and add new appliances such as a massage shower or a spa bathtub.

Increasing or changing a floorplan may take more time because you are getting into structural integrity as well as plumbing and electrical new systems or reconfiguration, so you will want to make sure that you budget your money and time accordingly. If you decide to increase your floorplan, make sure you used an Experienced Contractor who can help you make great use of all of your space and also make your new bathroom remodel as inviting and useful as possible.

If you are somewhere in between “sky’s the limit” and a limited budget, you may decide to replace old tubs and showers, tear out and replace bathroom cabinetry, and create an entirely new lighting package.  Depending on the scope of the project, this may cost you somewhere in the “middle” range of an average bathroom budget, but you will be surprised how just doing those minimal “invasive” tear-outs will transform your bathroom into looking brand new.

Ron Lee Homes Remodeling has a terrific team that is excellent about making recommendations that will fit within your job scope and budget to make your bathroom remodel the perfect renovation for your life.  We listen to our clients’ needs and then try to “squeeze the budget” as much as possible to exceed your expectations.  Working with a builder also has its advantages as we know how to get “in and out” of your home as fast as possible with as minimal mess, noise, and hassle of living with a remodel while it is happening.  Contact Ron Lee Homes Remodeling today to get a quote on your project.  Call 985-626-7619 or E-mail Info@RonLeeHomes.com.

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Construction Work in Mandeville, Louisiana, in St. Tammany

New jobs in the form of construction work and employee hiring is happening in Mandeville, Louisiana, in St. Tammany Parish.  Florida Marine, LLC, currently located off of the west side service road between Fairway (Judge Tanner) Drive and Hwy. 22, is doubling its commercial construction space from 27,500 square feet to 55,000 square feet and is expected to cost approximately $7.2 million.  The move will bring in 40 new Florida Marine jobs and approximately 180 jobs in construction including contractors and sub-contractors.

As part of the nonprofit business retention program offered by the St. Tammany Parish Economic Development Foundation, Florida Marine has focused on retention and expansion of its business and services over the past 14 years in Mandeville, Louisiana.  It purchased the present office building which it is now expanding in 2004.

“We have been very happy in St. Tammany Parish and are pleased to be expanding our offices,” said Dennis A. Pasentine, owner and CEO of Florida Marine.

In addition to the much needed commercial work space that the expansion of new construction will offer, the new campus-style building will also have an outdoor kitchen and courtyard for employee and customer events.  In case of inclement weather, the buildings will be fitted and retrofitted to include backup generators to restore power. The project has been designed by Greenleaf Architects and is being constructed by Kent Design Build.

“We congratulate Florida Marine on their expansion,” Parish President Pat Brister said. “The maritime industry is woven into the fabric of our community, and this growth will provide job opportunities and positive economic impact.”

In addition to the commercial construction of office space in Mandeville, LA, in St. Tammany Parish, Florida Marine is also expanding its shipyard in Harvey.  This West Bank expansion will create 200 additional jobs as well.

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Employment is Rising and Single-Family Homes Are Under Construction

New jobs reports and the falling unemployment rate have brought about a positive economic outlook of many Americans in the U.S. The employment growth is a big reason for both the real estate and housing industries’ latest boom both with new construction homes for sale as well as resale homes for sale. The strong job reports have encouraged many to believe there is not a “double dip” recession looming so many are relieved and feel confident in purchasing a new home. Everything from apartment buildings (multi-family homes) to single-family homes are under construction everywhere you turn in the country.

The rise in household formation by millenials as well college grads that have finally been able to get a job has led to new houses being built which has attracted workers in the construction industry. Employment in the field of construction reflects an average of 20% of the jobs that have been recently created. The American Association of General Contractors showed 80% of construction firms planned to hire this year. JOLTS survey showed an increase of 36% in the number of construction job openings year-over-year.

Mark Vintner, senior economist at Wells Fargo Securities says, “Home building will be one of the economy’s largest upside surprises in 2015.”

This is very good news for those looking for employment in the construction industry. Contractors are desperately seeking those who are skilled in all areas of construction which include part time and full time employees as well as sub-contractors. Vintner points out that overall, nationwide, there is a shortage of skilled construction workers. The American Association of General Contractors also reports that 87% of construction firms are having difficulty filling positions. Moody’s Analytics Adam Ozimek believes the shortage is due to lack of wage growth in the construction industry. However with the decline in unemployment, the job market will soon become an “employees’ market” instead of a employers’ market, which should drive up competitive hourly and salary wages. For the construction industry, this should put many out-of-work carpenters, builders, plumbers, electricians, and day laborers back to work with a healthy salary. Ron Lee Homes has been following this construction employment trend in St. Tammany Parish by expanding its services to include remodeling as well as custom home construction. To build your new, custom home today, Contact Us at 985-626-7619 or E-mail Info@RonLeeHomes.com.

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