First Quarter Prices Released

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On 1/2/2008 we uploaded the first quarter material pricing data. All subscribers should have received an email from RemodelMAX notifying them of this. Some of the pricing trends that RemodelMAX chose to highlight are as follows:

  • Drywall prices continue to drop due to lack of demand in the new housing sector, sinking 17% this year.
  • Common dimensional lumber prices have been stable with a modest rise during the summer ending the year with no increase.
  • Studs finished the year with pricing 5% below last year.
  • Plywood prices tumbled during the 4th quarter, climbing just over 2% during the year.
  • Concrete prices have remained steady during most of the past quarter, having increased over 5% during the year.

Also, the 12/17/07 Forecast for Material Pricing from the Engineering News-Record was cited:

The housing market is projected to continue its decline during 2008. Lumber and cement prices are forecast to remain flat while plywood may drop 5% in price. The bottom for drywall is not in sight yet with a 20% decline in price projected for 2008.

Harvard’s Joint Center for Housing Studies new report, Foundations for Future Growth in the Remodeling Industry, identifies key sources of future growth in the remodeling industry.

From the JCHS Housing Review Spring 2007

Over the last decade, the U.S. home improvement market nearly doubled in size, reaching a new high of $280 billion in 2005. After years of exceptional growth, the remodeling sector has returned to a more sustainable pace. Under investment in the owner-occupied and rental stock, a growing desire for energy-efficient retrofits, continued strength in high-end discretionary improvements, and projected increases in both the number of homeowners and per household expenditures ensures solid growth in remodeling activity in the years ahead.

Homeowner spending on remodeling is expected to increase at an inflation adjusted compound annual rate of 3.7 percent between 2005 and 2015, generating 43.6 percent growth for the decade. Also, with new construction slowing from its record pace and improvement and maintenance activity strengthening, the remodeling share of residential investment is expected to reach a new high of 47.0 percent by 2015.

In recent years, home improvement expenditures have become concentrated at the high-end, with almost a third of spending on upper-end discretionary projects by 2005, up from only a fifth in 1995. In 2004-2005, the top five percent of households spending the most for home improvements accounted for 61 percent of all remodeling expenditures, up from 45 percent a decade ago. Though spending on high-end discretionary improvements will continue to lead overall growth, several other economic and demographic forces are currently in place that will ensure favorable and more balanced growth in remodeling activity in the coming years.

In the short run, the aging housing stock, rising demand for energy-efficient retrofits, a strengthening market for high-end rentals and the rapidly rising number of senior, minority and non-family homeowners will all support sustained growth in replacements and system upgrades. With the slowdown in the housing market, homeowners are finding that in many cases mid-range versions of projects now have a better payoff than upscale versions. Furthermore, much of the housing stock, including homes all across the price spectrum, has had only modest improvements in recent years, and these under invested homes are now prime targets for replacements, upgrades and discretionary projects.

Foundations for Future Growth in the Remodeling Industry is available at www.jchs.harvard.edu

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