The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
Regional Housing Sales, Construction Slowing
The Atlanta Fed conducts a monthly poll of regional residential brokers and homebuilders to track emerging trends in housing markets. The latest results, which reflect activity in September 2014, suggest continued slow growth in sales and construction activity.
Many residential brokers and builders indicated that home sales were flat to slightly up from the year-earlier level. The report from brokers and builders on buyer traffic was mixed. Those who indicated a decline in traffic suggested that seasonal factors and a decline in buyer confidence were behind the decline. A growing share of residential brokers and builders reported that home inventory levels had increased slightly from the year-earlier level. Comments suggested that well-priced homes are moving quickly, but that many sellers are pricing their homes fairly optimistically, causing inventory to build until prices are adjusted.
Many builders reported that construction activity had increased from the year-earlier level. The drop depicted in the chart below reflects the fact that a growing share of builders reported construction activity as flat to down slightly.
Most builders indicated that they continue to experience upward pressure on materials prices. Builders’ reports ranged widely when we asked them to specify the materials experiencing the greatest pricing pressure, and their responses included concrete, drywall/sheetrock, and lumber. These reports are fairly consistent with year-over-year changes in the Engineering News Record’s cost indices: on a year-earlier basis, concrete prices are up 3–4 percent, drywall/sheetrock products are up 10 percent, and lumber products are up 7–9 percent.
Builders also continued to report upward pressure on labor costs and that they are having a tougher time filling positions compared to a year earlier. In addition to asking about builders’ difficulty filling positions, we posed a special question about labor shortages. Two-thirds of builders indicated that they were experiencing a labor shortage. Reports about the trades most affected by these shortages were also fairly wide-ranging, but there seemed to be a fair amount of consensus around the idea that framers, masons, carpenters, and drywall installers were the hardest tradespeople to come by on job sites. These results are fairly consistent with report released by the National Association of Home Builders earlier this year.
To explore these results in more detail, or to view other results that were not discussed in this post, please see our Construction and Real Estate Survey results.
Note: The latest poll results, which reflect activity in September 2014, are based on responses from 40 residential brokers and 25 homebuilders and were collected October 6–15. Please sign up if you would like to participate in this poll.
By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department
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