Author: Helen Thomas

January 22, 2015

184 Million Americans To Watch 2015 Super Bowl, According To NRF Survey

The most widely watched sporting event of the year will draw an estimated 184 million viewers, for Super Bowl XLIX on Sunday, February 1.  Average viewer spending will reach a survey high of $77.88, up from $68.27 last year, with fans planning to splurge on everything from game day food and new televisions to athletic wear and decorations.  Total spending is expected to reach $14.3 billion.

“With renewed confidence in the economy and the outlook for 2015, consumers are looking forward to some good old-fashioned fun with their friends and family to celebrate the big game,” said NRF President and CEO Matthew Shay.  “Retailers will take full advantage of the expected traffic from avid fans by making sure they have adequately invested in decor, party food and accessories and other Super Bowl related inventory.”

Of the 75.8 percent planning to watch the game, nearly eight in 10 (79.3%) will purchase food and beverages, 10.8 percent will buy team apparel or accessories and 8.8 percent will splurge on new televisions to watch the game at home.

Source: National Retail Federation

Lowe’s Canada announced plans to hire 2,000 seasonal employees at its existing 37 Canadian stores for the Spring and Summer season. The company will hold its first ever Canadian National Hiring Day on March 7 at all of their stores.

Lowe’s previously announced it will be opening 25 new stores in Canada over the next three years, including stores in Lethbridge, Saskatoon and Sault Ste. Mari. These three cities have Target stores, who announced January 15 that it will be closing. This is raising speculation that Lowe’s could buy those Target locations, but Lowe’s has not confirmed it will use current Target locations as sites for their future new stores.

Lowe’s also is set to hire 30,000 seasonal employees in the U.S.

Source: Retailing Today

January 27, 2015

Sales of newly built, single-family homes rose 11.6 percent in December to a seasonally adjusted annual rate of 481,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“This uptick is in line with what our builders are telling us in surveys and on the ground – that they are seeing increased traffic and more serious buyers in the market for single-family homes,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Missouri.

“After a slow start to 2014 precipitated by bad weather conditions, new home sales have ramped up in the second half of the year,” said NAHB Chief Economist David Crowe.  “We can expect this momentum to continue into 2015 with the release of pent-up demand, particularly as existing home owners are trading up.”

The inventory of new homes for sale rose to 219,000 in December, which is a 5.5 month supply at the current sales pace.  Regionally, new home sales rose 53.6 percent in the Northeast, 17.7 percent in the South and 3.1 percent in the West.  Sales dropped 11.5 percent in the Midwest.

Source: National Association of Home Builders

January 27, 2015

The Conference Board Consumer Confidence Index, which had increased in December, rose sharply in January.  The Index now stands at 102.9, up from 93.1 in December.  The Present Situation Index rose to 112.6 from 99.9, while the Expectations Index increased to 96.4 from 88.5 in December.

Lynn Franco, Director of Economic Indicators at The Conference Board, said: “Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index 105.6).  A more positive assessment of current business and labor market conditions contributed to the improvement in consumers’ view of the present situation.  Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings.”

Consumers’ assessment of present-day conditions was considerably more favorable in January than in December.  Those saying business conditions are “good” increased from 24.7 percent to 28.1 percent, while those claiming business conditions are “bad” decreased from 18.9 percent to 16.8 percent.  Consumers were also much more positive in their assessment of the job market.  Those stating Jobs are “plentiful” increased from 17.2 percent to 20.5 percent.  Those claiming jobs are “hard to get” decreased from 27.3 percent to 25.7 percent.

Consumers’ optimism about the short-term outlook improved in January.  The percentage of consumers expecting business conditions to improve over the next six months rose from 17.8 percent to 18.4 percent, while those expecting business conditions to worsen declined from 9.9 percent to 7.7 percent.

Consumers’ outlook for the labor market was also more optimistic.  Those anticipating more jobs in the months ahead increased from 14.6 percent to 16.7 percent, while those anticipating fewer jobs declined from 16.5 percent to 15.0 percent.  The proportion of consumers expecting growth in their incomes improved from 16.2 percent to 20.0 percent.  However, the proportion expecting a decrease increased marginally, from 10.2 percent to 11.3 percent.

Source: The Conference Board

January 21, 2015

Led by solid gains in single-family housing production, nationwide housing starts rose 4.4 percent to a seasonally adjusted annual rate of 1.089 million units in December, according to newly released data from the U.S. Commerce Department.  For the year, overall housing starts topped 1 million units.

“Today’s figures continue to be in line with our recent surveys, as builders have been becoming increasingly optimistic,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

“With overall starts ending the year above 1 million units for the first time since 2007, we expect this momentum to carry forward in 2015,” said NAHB Chief Economist David Crowe.  “A growing labor market and strengthening economy will spur steady growth in single-family housing production in the year ahead.”

Single-family housing production rose 7.2 percent to a seasonally adjusted annual rate of 728,000 in December while multifamily starts edged 1 percent lower to 361,000 units.

Combined single-family production was up in three out of four regions in December.  The Northeast posted a 12.5 percent gain, the South was up 8.8 percent and the West registered a 5.8 percent increase.  The Midwest posted a 13.3 percent decline.

Overall, permit issuance was down 1.9 percent in December to a rate of 1.032 million.  Single-family permits rose by 4.5 percent to 667,000 units while multifamily permits fell 12 percent to a rate of 365,000 units.

Regionally, permits were mixed in December.  The Midwest and South posted gains of 6.7 percent, respectively, while the Northeast and West dropped 16.8 percent and 20.5 percent.

Source: National Association of Home Builders

January 21, 2015

The 55+ housing market fared quite well in 2014, and 2015 should be no different, according to industry experts at a press conference held today at the National Association of Home Builders (NAHB) International Builders’ Show (IBS) in Las Vegas.

“The 55+ housing market has been one of the healthiest segments of the overall housing market, and is likely to remain that way over the next several years,” said Paul Emrath, NAHB’s vice president of survey and housing policy research.  “When you look at age-restricted single-family starts, there were as many in the first half of 2014 as in all of 2012.  And going forward, the steady rise in the 55 and over population will signal an increased need for housing to accommodate that group.”

Emrath also noted that builder confidence has steadily increased over the past several years.  “NAHB’s 55+ Housing Market Index (HMI), a survey of members that measures builder and developer confidence for that market, has regularly posted year-over-year gains.”

Builders and developers say they have seen an increase in not only the number of people who are generally interested in 55+ housing, but also in the number of people who are actually making the move to purchase a new home.  “We are seeing more consumers actually make the decision to buy a new home as they are able to sell their current home at an acceptable price,” said Steve Bomberger, chairman of NAHB’s 50+ Housing Council and president of Benchmark Builders Inc. in Wilmington, Delaware.  “We are busier now than ever before.  And I don’t think it’s going to slow down anytime soon.”

“Consumers in this market are looking for a home that accommodates their specific needs, and 55+ builders and developers are able to create homes and communities that address these needs,” said Timothy McCarthy, vice chairman of NAHB’s 50+ Housing Council and managing partner of Traditions of American in Radnor, Pennsylvania.  “As the economy continues to improve, so does our overall business.  Builders in this market have the opportunity to have tremendous success since the population we are serving is so vast.”

Source: National Association of Home Builders 

A strengthening U.S. dollar works well for retailers who are almost exclusively selling in the U.S. and buying their product abroad. Jan Kniffen, CEO of J.Rogers Kniffen Worldwide Enterprises, spoke on CNBC this week about the effect a stronger U.S. dollar will be for retailers. “Retailers who only sell here but buy in other countries will benefit the most. Who are we talking about? Dollar Stores, Macy’s, Target, Kohl’s, J.C. Penneys.”

The main benefit for these retailers is that they purchase product from other countries and re-price product each time they place an order, so orders are less expensive each time the U.S. dollar grows stronger.

The same retailers who benefit from falling U.S. energy costs will benefit from the strong U.S. dollar. “The domestic retailers who are not high end and more middle market will benefit from falling gas prices as their customers have more money to spend.”

Source: CNBC

January 26, 2015

Cupid has some tricks up his sleeve this year with plans to shower Americans with jewelry, candy and a special night out.  According to the National Federation’s Valentine’s Day Consumer Spending Survey, the average person celebrating Valentine’s Day will spend $142.31 on candy, flowers, apparel and more, up from $133.91 last year.  Total spending is expected to reach $18.9 billion, a survey high.

“It’s encouraging to see consumers show interest in spending on gifts and Valentine’s Day related merchandise – a good sign for consumer sentiment as we head into 2015,” said NRF President and CEO Matthew Shay.  “Hoping to draw in eager shoppers, retailers will offer unique promotions on gifts, meal options at restaurants and even experiences.”

While most (53.2%) plan to buy candy for the sweet holiday, spending a total of $1.7 billion, one in five (21.1%) plans to buy jewelry for a total of $4.8 billion, the highest amount seen since NRF began tracking spending on Valentine’s gifts in 2010.

Additionally, 37.8 percent will buy flowers, spending a total of $2.1 billion, and more than one-third (35.1%) will spend on plans for a special night out, indlucing movies and restaurants, totaling $3.6 billion.  Celebrants will also spend nearly $2 billion on clothing and $1.5 billion on the gift that keeps on giving: gift cards.

The survey found nine in 10 (91%) plan to treat their significant others/spouses to something special for the consumer holiday, with plans to spend an average of $87.94 on them, up from $78.09 last year.  Additionally, 58.7 percent will spend an average of $26.26 on other family members and $6.30 on average – which equates to a whopping $703 million on pint-sized gifts of all varieties.

“It’s great to see consumers coming out of their shell this year, looking to spend discretionary budgets on those they love once again, though I fully expect many to continue to look for ways to cut costs where they can.  While many will splurge, some will still look for simple and affordable ways to show their appreciation for friends and family and celebrate in a way they are most comfortable with.”

Discount (35.2%) and department stores (36.5%) will be among the most visited locations for those looking for the perfect Valentine’s Day gift, as will specialty stores (19.4%) and florists (18.7%).  One-quarter (25.1%) say they will shop online and 13.3 percent will shop at a local or small business to find something unique for their loved one.

It seems women are in for the biggest treat this Valentine’s Day.  Men will spend nearly double what women plan to spend ($190.53 versus $96.58 on average, respectively.)  Additionally, adults 25 to 34 will outspend other age groups at an average of $213.04; 35 to 44 year olds will spend an average of $176.21 and 18 to 24 year olds will spend an average of $168.95.

Source: National Retail Federation

January 23, 2015

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in December to 121.1, following a 0.4 percent increase in November, and a 0.6 percent increase in October.

“December’s gain in the LEI was driven by a majority of its components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum,” said Ataman Ozyildirim, Economist at The Conference Board.  “Still, a lack of growth in residential construction and average weekly hours in manufacturing remains a concern.  Current economic conditions measured by the coincident indicators show employment and income gains are helping to keep the U.S. economy on a solid expansionary path despite some weakness in industrial production.”

The Conference Board Coincident Economic Index (CEI) for the U.S. increased 0.2 percent in December to 111.4, following a 0.5 percent increase in November, and a 0.3 percent increase in October.

The Conference Board Lagging Economic Index (LAG) for the U.S. increased 0.3 percent in December to 115.0, following a 0.3 percent increase in November, and no change in October.

Source: The Conference Board

January 20, 2015

A strengthening labor market, low interest rates, improving mortgage availability and growing pent-up demand will help to significantly boost single-family housing production in the year ahead and move the housing recovery to higher ground, according to economists speaking at the International Builders’ Show in Las Vegas today.

With economic growth near 4 percent for the last half of 2014 and employment gains averaging more than 250,000 per month last year, NAHB Chief Economist David Crowe said these are the primary factors that have helped consumer confidence jump back to pre-recession levels.

“The signs point to a more robust year for housing,” Crowe said.  “Household balance sheets are returning to normal levels, home owners’ equity is increasing and significant pent-up demand is rising.  More than 7 million existing home sales were postponed or lost during the downturn; and while some are lost forever, we should see some catch-up.”

The Forecast

NAHB is projecting 993,000 total housing starts in 2014, up 6.7 percent from last year’s total of 930,000 units. 

Single-family production is expected to rise 26 percent in 2015 to 804,000 units.  “While a good beginning, this is still well below a normal level of 1.3 to 1.4 million single-family starts,” Crowe said.

On the multifamily front, NAHB is anticipating 358,000 starts in 2015, up 2 percent from 352,000 last year.

The sale of new single-family homes is expected to hit 564,000 this year, a 29.3 percent increase above last year’s 436,000 in sales.

Meanwhile, residential remodeling activity is expected to register a 3 percent gain this year over 2014.

The ongoing housing recovery will see single-family starts steadily climb from 49 percent of normal production at the end of the third quarter of 2014 all the way up to 90 percent of normal by the end of 2016, Crowe said.  Examining the recovery on a state level, by the end of 2016, the top 40 percent of states will be back to near normal production levels, compared to the bottom 20 percent, which will still be below 75 percent.

Where are All the New Households?

David Berson, chief economist at Nationwide Insurance, said the number of new household formations was far fewer in the current economic expansion than in previous recoveries.

“Given the job growth we’ve seen in 2014, there should have been better household formations,” he said, adding that the slower pace may be because “the real acceleration in job growth has occurred just recently – in the last six months.”

As the economy and job growth continue to strengthen in 2015, Berson said this will be a “significant factor to encourage people who have doubled up to move out on their own.”

Moreover, he noted that the real slowdown in household formations has come from the Millennials, who have suffered disproportionately from stagnant wage growth and student debt.  However, he added that this key demographic is getting older and ready to set down roots.  “The leading edge are new in their young 30s,” said Berson.  “Homeownership desire is much higher for those who are in their 30s than those in their 20s.”

A Rising Economy Lifts Housing

Freddie Mac Chief Economist Frank Nothaft also foresees a good year for housing.

“We’re projecting 3 percent economic growth in 2015, which would only be the second year in the last decade that we’ve seen growth at that level,” said Nothaft.  “A stronger economy supports a rise in household formation and home buying.”

Not quite as bullish as NAHB, Nothaft expects that housing starts will rise about 15 percent in 2015, and that home sales will be up 4 percent, which would be the best year for home sales since 2007.  He added that nationwide home prices this year should increase about 3.5 percent to 4 percent above last year’s level.

With 30-year mortgages currently running at about 3.75 percent, Nothaft called them “dirt cheap” and said he expects rates to rise this year but remain at affordable levels.

“If we see economic growth running at 3 percent at an annualized rate, the Federal Reserve should begin to push up short-term interest rates by the second half of 2015,” said Nothaft.  “We see mortgage rates going up to 4.5 percent on the high side at the end of this year, going from dirt cheap to cheap.  Overall, affordability for buyers in most markets will be well maintained in the context of strong job and income growth.”

Source: National Association of Home Builders