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Wednesday, December 26, 2012

Existing home sales jump in November

Existing home sales jumped 5.9 percent in November, pulling sales up to a 5.04 million-unit pace. Home prices also increased, with the median price rising 10.1 percent over the past year, reflecting fewer distressed sales.

Architectural Billings Index Gains for Fourth Straight Month, Positive Conditions for all Sectors

Washington, D.C. – December 19, 2012 – Billings at architecture firms across the country continue to increase. As a leading economic indicator of construction activity, the Architecture Billings Index (ABI) reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the November ABI score was 53.2, up from the mark of 52.8 in October. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.6, up slightly from the 59.4 mark of the previous month.

“These are the strongest business conditions we have seen since the end of 2007 before the construction market collapse,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The real question now is if the federal budget situation gets cleared up which will likely lead to the green lighting of numerous projects currently on hold. If we do end up going off the ‘fiscal cliff’ then we can expect a significant setback for the entire design and construction industry.”

Key November ABI highlights:
• Regional averages: Northeast (56.3), Midwest (54.4), South (51.1), West (49.6)
• Sector index breakdown: multi-family residential (55.9), mixed practice (53.9), commercial / industrial (52.0), institutional (50.5)
• Project inquiries index: 59.6

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

November Housing Starts

Housing starts fell 3.0 percent in November to an 861,000-unit pace. Single-family starts fell 4.1 percent and multifamily fell 1.0 percent. Even with November’s drop, the past three months were the best in four years.

Wells Fargo's November Housing Summary

Expectations for home sales and new home construction have increased considerably in recent months as the underlying fundamentals have improved. Housing is one of the few areas of the economy that has been left essentially unshaken by the uncertainty surrounding the fiscal cliff. We have repeatedly noted that home sales and new home construction will almost certainly strengthen in 2013, even if overall economic growth decelerates.  This apparent contradiction owes itself to the slow but steady improvement in the operating fundamentals for the housing market, including 33 straight months of private sector job growth and rising housing formations. Steady buying by investors has also helped reduce distressed home inventories. With supplies dwindling, home prices have improved across much of the country, which is helping bring trade-up buyers back into the market.

Housing Starts and Permits for October

Housing starts followed up a 15.1 percent jump in September, rising
3.6 percent to a 894,000 unit pace in October. An 11.9 percent gain
in multifamily starts accounted for the entire gain, as single-family
starts dropped 0.2 percent, the first decline in three months. We
expect housing starts to pull back in November, declining to a
865,000 unit pace. While part of the decline will be payback from
such strong starts the two months prior, we have seen some
indication of a moderation in starts in other economic data.

Building permits, an indicator for future construction, fell
2.7 percent in October, and November’s employment report showed
construction of residential buildings employment shrinking
1.2 percent

Residential construction is one area of the economy poised to
improve in 2013. We expect single-family starts to rise nearly
27 percent and multifamily starts to jump 32 percent in 2013.

Wednesday, December 12, 2012

3Q Commercial Report

Our forecast calls for real GDP growth to slow to a 1 percent pace or less during the final quarter of 2012 and the first half of 2013. The slowdown is primarily due to increased uncertainty, which has caused businesses, both large and small, to put off key decisions on capital spending and hiring. What little strength is present in the economy appears to be broadening. Residential construction is one clear area of improvement, and gains in homebuilding should ultimately follow through to commercial construction as well.
The sluggish economic recovery has kept commercial real estate in the slow lane. All property types have seen some improvement, thanks mostly to record low levels of new construction. Apartments have seen the greatest improvement, benefiting from increased household formations and tighter mortgage underwriting standards. Warehouse and industrial markets have also seen demand improve. Vacancy rates have improved much less in the office and retail sectors.

Friday, November 30, 2012

Construction Spending Report

Construction spending rose 0.6 percent in September and is now
up 7.8 percent compared to a year earlier. The housing market
recovery has been a significant driver of recent gains. Residential
construction, which has historically accounted for about 45 percent
of total construction outlays, is up 19.2 percent on a year-over-year
basis after posting gains for six consecutive months. Nonresidential
spending, however, has deteriorated in recent months under
weaker petroleum and office construction and has slowed to a
2.6 percent year-over-year pace.

We look for construction spending to have increased 0.4 percent in
October. Housing starts increased 3.6 percent during the month
and are up 42 percent over the past year. In addition, the October
employment report showed the largest increase in construction
employment since January, intimating another modest increase in
construction activity for the month.

Wednesday, November 14, 2012

Certified Steel Stud Association (CSSA) Formed

A newly founded organization called the Certified Steel Stud Association (CSSA) takes a low-cost and simple approach to code compliance certification. CSSA is working with the ICC Evaluation Service (ICC-ES) to set up requirements by which its members can obtain product certification from ICC-ES. As you probably know, ICC-ES is responsible for evaluating building products for building code compliance. Code Officials, Building Inspectors, Architects, Distributors and Contractors alike all know and recognize the ICC-ES name.

The sole purpose of CSSA is to enroll distributor-friendly manufacturer members into the certification program created and managed by ICC-ES; a subsidiary of the International Code Council (ICC), which develops the International Building Code (IBC). ICC-ES is an ANSI accredited listing agency fully complying with section 1703 of the IBC. ICC-ES President Shahin Moinian said, "ICC-ES is pleased to be the certification agency of choice by CSSA. It is our belief that this cooperation is beneficial to the industry."

CSSA is pleased to announce three new members:
  • Marino\WARE®, with four manufacturing locations, and based in South Plainfield, NJ
  • CEMCO®, with four manufacturing locations, and based in City of Industry, CA
  • Telling Industries®, with three manufacturing locations, and based in Cambridge, OH 
For more information on CSSA's purpose and cost of membership, please go to the website at

Friday, November 2, 2012

Consumer Confidence Rises

Consumer confidence rose 3.8 points in October to 72.2, which marks the highest level in more than four years. Most of the improvement came in the present situation series, which has been lagging in this recovery.

Single Family Posts Gains

Total construction spending rose 0.6 percent in September to
an $851.6 billion annual pace and is up 7.8 percent on a yearago
basis. Residential outlays continue to be a bright spot, with
single-family now up 25.7, year over year. Single family outlays
increased for the sixth consecutive month and mirror modest
housing market improvement and improving builder
sentiment. Multifamily and home improvement also increased.

Friday, October 26, 2012

Economic Growth Picks Up the Pace in the Third Quarter

Reflecting improvement in consumer spending, residential investment and government spending, real GDP
accelerated to a 2.0 percent annualized pace in Q3. Significant headwinds, however, weigh on the outlook.

New Home Sales Rise in September

New Home Sales Rise Solidly
· New home sales rose solidly in September, paced by strong
gains in the South. The South, which accounts for just over half
of the nation’s new home sales, posted a 16.8 percent gain in
September, pushing sales to a 215,000-unit pace.
· Sales also rose modestly in the Northeast and West, but fell
37.3 percent in the Midwest. The outsized drop in the Midwest
looks suspicious, but growth has slowed there recently.

New Home Inventories Remain Exceptionally Lean
· September’s solid gain in new home sales is keeping inventories
exceptionally low at just a 4.5 months’ supply.
· Lean new home inventories are helping drive prices higher. The
median price of a new home has risen 11.7 percent over the past
year, while the average price has jumped 14.5 percent. Plenty of
foreclosures are still for sale and that is keeping the gap between
the median new and existing home price unusually wide.

Friday, October 19, 2012

Wells Fargo's Economic Commentary - Housing

Residential Construction Boosting Economic Growth
Housing seems to be firming up, particularly the residential
construction sector. Not only did September housing starts jump
to the fastest pace since 2008, but building permits also surged
11.6 percent, the largest monthly jump since the expiration of the
homebuyer credit in 2010. We expect improvement in housing to
underpin economic growth in 2013.

New Home Sales • Wednesday
New home sales pulled back in August, declining 0.3 percent to a
373,000-unit pace for the month after a sharp 3.6 percent rise in
July. The decline was concentrated in the South, with the other
major regions all posting increases. Even with the pullback in
August, new home sales are still up 27.7 percent over last year. The
inventory of new homes remains very depressed at 4.5 months’
supply. The other big news from the August report was an
11.2 percent jump in median new home prices for the month. We
expect September new home sales to bounce back in September,
rising 3.5 percent to a 386,000-unit pace. The stabilization and
modest appreciation in existing home prices is helping to narrow
the price spread between new and existing homes. As a result,
builder confidence continues to rise, indicating a gradual pace of
firming in the new home market.

Housing starts surged 15.0 percent in September

Housing starts surged 15.0 percent in September to a 872,000-unit annual pace. The reading is the highest level since July 2008 with broad-based gains in single-family and multifamily. Permits rose 11.6 percent.

Tuesday, September 25, 2012

Consumer Confidence Rebounds

A huge 12.6 point jump in expectations about future economic conditions sent consumer confidence up 9.0 points in September. The rise in expectations mirrors the recent improvement in the stock market.