Hardware Retailing

DEC 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/1056221

Contents of this Issue

Navigation

Page 42 of 78

HARDWARE RETAILING | December 2018 38 Hardware Retailing (HR): What trends are you seeing in the current housing market? Kermit Baker (KB): The housing market continues to be quite strong on the construction side. Single-family housing starts were slow in getting underway coming out of the recession, but they're growing and have grown at a solid 7 or 8 percent pace for the last few years. It looks like there's enough demand and enough new households that the number of housing starts is going to continue to go up for a while. Existing-home sales are still pretty weak. There isn't a lot of inventory out there, and we're not seeing the turnover of homes that we've historically gotten. The single-family market was very slow to recover from the recession. Now, we're starting to see that pull back more toward normal conditions. Millennials are a big part of the story. They're getting married and having children later. I think the economy has recovered for millennials, and we'll see homeownership numbers begin to pick up. Given how tight the labor market is now, we're seeing wages pick up throughout the economy. That is also helpful for establishing a more balanced housing market. HR: What does the health of home construction say about the U.S. economy? KB: Everything seems to be percolating along pretty well for the economy, but next summer will be the 10th anniversary of this economic expansion. That will make it the longest economic expansion in post-World War II history. I think there's a bit of concern that the music will stop sometime in the not-too-distant future and slow down the potential of the construction market. Some signs of concern we're seeing are inflation starting to pick up again and interest rates moving up, indicating that the Federal Reserve wants to slow things down. We've got a very tight labor market. We're running some reasonably serious federal budget deficits. All those things play together. We might have a mild recession in the broader economy. If that happens, construction would slow as a result of the economic downturn, not because markets are overbuilt or overpriced. HR: What are the impacts of tariffs on home construction and remodeling? KB: Construction material costs have grown almost 10 percent over the last year. Some of that is because of tariffs or threatened tariffs on products that are used in construction, such as steel and aluminum. We're also seeing cost increases in wood products and in gypsum board, concrete, diesel fuel and metals besides steel and aluminum. Taking a Look at Housing A Q&A With Kermit Baker To learn more about the ways housing affects the overall economy, Hardware Retailing spoke to Kermit Baker. He is a senior research fellow at Joint Center for Housing Studies of Harvard University, and is the project director of the Remodeling Futures Program. He also serves as the chief economist for the American Institute of Architects. Housing Market Outlook

Articles in this issue

Archives of this issue

view archives of Hardware Retailing - DEC 2018