A strong spring home purchase season could reverse the downward trends in single-family construction and remodeling activity and help deter an economic downturn, a report from BuildFax said.
But for February, there was a year-over-year decline in single-family housing authorizations, maintenance volume and remodeling activity for the fourth consecutive month.
“However, we anticipate some economic relief as we head into 2019’s spring home buying season,” BuildFax CEO Holly Tachovsky said in a press release. “Mortgage rates have reached recent lows leading to increased potential for home sales, which is oftentimes followed by a surge in remodeling activity. The performance of single-family housing authorizations, maintenance and remodeling activity through this next season will shed light on whether declines in the housing market will spread to the broader economy.”
BuildFax reiterated its previous conclusion that if the decline in single-family housing authorizations continue, an economic slowdown is likely.
Single-family housing authorizations fell by 5.75% when compared with February 2018. For January, the year-over-year decline was 6.47%.
Existing housing maintenance activity fell 5.53% year-over-year in February, compared with 6.47% in January. But the dollars spent on maintenance increased 3.31% from the previous year.
The housing remodel volume, a subset of the maintenance category which included housing renovations, additions and alterations, decreased by 10.07% year-over-year. However, remodeling spending increased 1.61% compared to February 2018.
The increases in maintenance and remodel spend are likely because of the recent spikes in construction labor costs, BuildFax said.
Of the nation’s 10 largest cities, four — Chicago, Washington, New York and Dallas — bucked those recent downward trends and had year-over-year increases in new construction (both single- and multifamily) and maintenance activity.
Chicago had the largest increase in new construction, up 19.51%, and existing construction, up 60.15%, over February 2018.
“If economic instability increases over the next few years, as some reports suggest, areas that are growing in spite of [national] trends will become progressively starker over time,” Tachovsky said.