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Worker Shortage Hammers Builders

The Wall Street Journal’s Jeffrey Sparshott looks at the labor crisis in the home building industry, which has forced many firms to amp up their pay, and boost recruitment–sometimes even stealing subs from a rival builder’s jobsite.

“Finding experienced people is difficult,” said Tim McNew, a senior vice president at TD Industries, a Dallas-based builder and facilities-management company. “When the economy shrank and the construction industry shrank, there were a lot of people who left and they haven’t returned.”

Payrolls have been expanding in the commercial construction industry faster than the economy-at-large, Sparshott notes–earnings were up 3% in April year-over-year, vs. 2.2% for all of the private sector. And at non-union shops, workers are seeing their biggest raises since 2008, according to the article.

ProBuild’s Net Losses for Past 13 Quarters Total Near $200mln

The ProBuild operation that Builders FirstSource plans to acquire has recorded net losses totaling $198.1 million in the 39 months between January 2012 and March 2015, filings this month to the Securities and Exchange Commission reveal.

The latest filing, posted May 29, also contains a balance sheet that declares 43% of ProBuild’s assets are classified as “goodwill” and the accumulated deficit to the dealer’s current owners has grown to $815.5 million.

BFS  announced on April 13 it will acquire ProBuild in an all-cash deal worth $1.63 billion, an acquisition that creates America’s biggest pro-oriented building material supplier with  operations from Florida to Alaska.

ProBuild has long been rumored to have lost hundreds of millions of dollars since its creation in 2006. But last week’s filing, combined with a 2012-2014 income statement, posted earlier this month, provide the first comprehensive insights into the Denver-based giant. They generally show a company whose prospects have improved since 2013 but arguably remain weak. The $1.03 billion classified on the balance sheet as goodwill also indicates that ProBuild’s owners indeed have lost big bucks on the deals.

Gross Margins Rise

One case of slow improvement shows up on ProBuild’s gross margins. They rose from 24.3% in 2012 to 25.0% in 2013 and to 25.8% in 2014. That improvement continued in the first quarter of this year: It inched up to 25.9% for January through March compared with 25.3% in the year-earlier period.

Likewise, operating expenses (including depreciation and amortization) as a percentage of net sales also have declined, shrinking from 24.3% of $3.62 billion in sales in 2012 to 23.3% of $4.34 billion in sales in 2013 to 22.9% of $4.48 billion in sales last year. More year-over-year improvement took place in 2015′s first quarter: From 27.4% in operating costs during last year’s first-quarter net sales of $908.4 million, operating costs ate up only 25.9% of the $913.1 million in net sales posted in this year’s opening three months.

Those improvements helped ProBuild swing from a $104.9 million operating loss in 2012 to an $11.1 million operating profit in 2013 and a $70.9 million gain in 2014. ProBuild’s profilts revered again in this year’s first quarter, posting an operating loss of $10.3 million, but that’s just one-third of the $33.3 million operating loss in 2014′s first quarter.

Add it up, and you get operating losses for the 13 quarters totaling $34.5 million. That’s about 2.5% of the $13.35 billion in net sales over those 3-1/4 years.

Interest Expense Burden

So why did net losses total $161.6 million in 2012 and $40.7 million in 2013 before swinging to a $25.2 million net profit in 2013? Mainly because ProBuild paid $173 million in interest expenses during those years. That also was an issue in this year’s first quarter, when $12.9 million in interest expenses helped produce $21 million in net loss from operations. Add the interest burden to the operating losses you get most of what produced $198.1 million in net losses.

All these activities left ProBuild as of March 31 with $2.39 billion worth of assets. Of that, goodwill was the biggest factor, at $1.03 billion. PriceWaterhouse Coopers, the accounting firm that produced the financial report, defines goodwill as “the excess over the purchase price over the fair market value of the net assets of acquired businesses at the dates of acquisition.” Many dealers regard goodwill as a fake asset for LBM operations, as they don’t tend to have as valuable a brand name as, say, Apple Computer or Starbucks.

ProBuild’s other assets include $414.6 million worth of accounts receivables, and $337 million in inventories. It claims $571.8 million in property and equipment, but $267 million of that amount is held under capital leases and lease finance obligations.

On the liabilities side, ProBuild has $1.34 billion worth of notes payable and lease obligations. The stockholder’s equity line shows $869.2 million worth of paid-in capital and $815.5 million worth of accumlated stockholders’ deficit.

The ‘Noncontrolling Interests’ Factor

As with many large companies, ProBuild has a complicated ownership structure and organizational makeup. ProBuild Holdings Inc. and its subsidiaries are owned by ProBuild Capital LLC, which in turn is owned by FMR LLC and an entity related to FMR LLC called ProBuild Investors LLC. FMR is better known as Fidelity, the investment managent company. It owns ProBuild through its private investment unit, Devonshire Investors,

ProBuild Capital also owns ProBuild Real Estate (PBRE) Holdings LLC, which owns properties that are leased to ProBuild Holdings. PBRE is considered a variable interest entity for which, as PriceWaterhouse Coopers sumarizes, the company directs activities and absorbs losses related to property sales and disposals.

Noncontrolling interests racked up losses of $148.4 million in 2012 and $21.6 million in 2013, but swung to a $36.4 million profit last year. This means that net loss attributable to ProBuild Holdings was relatively limited: losses of $13.2 million in 2012, $19.1 million in 2013, and $11.2 million in 2014. (Plus $4.9 million in 2015′s first quarter, when the loss attributable to noncontrolling interests hit $16.1 million.)  But this may be more an accounting distinction than a real difference-maker, as dealer-owners often consider real-estate issues related to their facilities as part of their overall financial management.

What are the Most Active New Sales Markets?

New Home Sales Growth

New home sales have totaled 441,000 over the last 12 months ending in January, up 3 percent from a year ago1. While still below the 660,000 annual average of the last 50 years, the national and regional data available from the Census Bureau mask local pockets of strength. In this post, we use public record deeds as the source of new home sales to examine patterns in the 50 metropolitan areas with the highest number of new sales. We evaluate markets by ranking them on two metrics: new home sales growth and new home sales share. The analysis reveals that the healthiest new home sales markets are primarily in the South, especially in Texas and the Carolinas.

Eight of the 10 fastest growing new home sales markets are in the South and the fastest growing new home sales market in the U.S. is Nashville, Tenn., where new sales grew by 17 percent over the prior year (Figure 1). Nashville is not only exhibiting strength over the last year, but it is one of only five markets that have higher new home sales in 2015 than in the very early 2000s when markets were more normal. The second fastest growing market is San Jose, Calif., where new sales grew 14 percent from a year earlier. It is also one of the five markets that is currently larger from a new sales volume perspective in comparison to the early 2000s. Atlanta, Ga. is the third fastest growing market, where new sales are up 10 percent from a year ago. Atlanta’s new home market strength is particularly remarkable given that distressed sales still account for 16 percent of all sales–by far the highest of the three markets. As distressed sales continue to fall in Atlanta, that will give additional marginal lift to new sales.

New Home Sales Share

New Home Sales Share

Of the 10 markets with the highest new sales share, seven are either in Texas or the Carolina’s (Figure 2). The market with the highest new home sales share is El Paso, Texas where 22 percent of all sales were new construction, compared with only 8 percent nationally. While most markets have had large swings in overall sales and prices over the last few years, the El Paso housing market has been stable, and the same is true of new sales, which have consistently averaged 22 to 24 percent of overall sales the last 15 years. The market with the second highest new sales share is Raleigh, N.C., where new sales account for 21 percent of all transactions. However, while Raleigh has an elevated new sales share, it began to trend down in 2014 in response to the rapid price appreciation and higher rates. This is confirmed by the 5 percent decline in single-unit permit construction that occurred in 2014 compared with 2013. The good news is that Raleigh’s permits have strengthened in the first three months of 2015 and are running slightly ahead of 2014. The market with the third highest new sales share is Charleston, S.C., where new sales averaged 20 percent of all transactions. Charleston’s new home sales market has been steadily improving and is also one of the five markets out of the top 50 that has more new sales than in the early 2000s. The one concern in Charleston is the rapid price appreciation for new homes, which has increased by over $60,000 during the last two years alone, which is more than new home prices appreciated between 2000 and 20122.

Overall, while new home sales remain relatively low in comparison to normal times, there are several southern markets that buck the national trend. Looking forward, southern markets with strong demographic growth will exhibit robust new home sales activity. In many of the remaining metros with solid job growth, the reality of very low inventory of unsold new homes, declining vacancies and rapid price appreciation will lead to more construction in the next few years that will lift many more markets above their current new home sales trajectory.

[1] The remainder of the data and trends cited in this article is for the 12 months ended in January 2015.
[2] The rise is partly due to a changing mix of new sales to larger new homes with more amenities, but still given the low inventory it would serve a tailwind to the expansion of new sales.

Housing Starts Projected to Hit 1.1 Million in 2015

The first-quarter update from Metrostudy indicates U.S. Housing Starts are expected to advance gradually to hit 1.1 million this year, with 715,000 of those being single family homes as defined by the Commerce Department.

 

Metrostudy, a Hanley Wood company, announced today the release of its first quarter 2015 Home Building Outlook detailing housing construction trends nationwide.  The Home Building Outlook is the platform for Metrostudy’s national and local forecasts, spotlighting the Top 100 Housing Markets across the United States.

The first quarter update indicates U.S. Housing Starts are expected to advance gradually to hit 1.1 million this year, with 715,000 of those being single family homes as defined by the Commerce Department.  Multi-family housing starts are expected to increase to 385,000 as the rental market continues to exhibit strength.

New Home Sales are expected to increase 18.8% to 519,000 this year, up from 437,000 in 2014.  The best overall new home markets are Denver, Austin, and The Villages (FL) in terms of health and local new home sales forecast.  The southern U.S. dominates in terms of sales volume, with the largest new home markets expected to be Houston, Dallas, and Atlanta.

“We continue to forecast a gradual recovery in construction,” says Brad Hunter, Chief Economist of Metrostudy.  “Our forecast of eventual rising new home demand is founded on a reversion to long-standing typical behavior patterns.   One of these relates to the “doubling-up” of households during and after an extended recession.  But we are now seeing some evidence that those households are beginning to split apart once again, increasing demand for housing.  As rising rents eventually hit the pain point, more people will begin to consider home ownership again.”

Metrostudy produces the Home Building Outlook to provide the building industry with visibility into local residential construction activity as well as official national forecasts.

Construction Costs in the U.S. Are Rising

A smaller post-recession construction industry explains the rising numbers.

 

Newly released reports from international property and construction consultants Rider Levett Bucknall (RLB) show that construction costs are on the rise in the United States, as the construction industry itself has diminished in size since the recession that began in 2008.

The firm’s First Quarter 2015 USA Construction Cost Report manifest a numerical explanation of the position the industry stands in currently: with costs of materials and labor gradually increasing, the demand for subcontractors “has led to upward pressure on bid prices in busy areas,” said Julian Anderson, president of RLB, in an email.

Falling gasoline prices in the first quarter of 2015, translating to a falling energy index and the Consumer Price Index (CPI) falling at a rate of 4.03 percent, also contributed to the construction cost inflation. Construction cost inflation’s first quarter annualized rate stands at 4.64 percent.


Rider Levett Bucknall North America

The chart above shows the national construction cost index increase from January 2010 to January 2015, from low 140′s to just under 163.

The report’s research shows a 5.5 percent increase in the national average in construction cost from that January 2014 and December 2014. The city with the highest annual increase is Honolulu, with 13 percent; meanwhile, cities such as Washington, D.C., New York, Denver, and San Francisco witnessed milder increases, ranging from 4 percent to 6 percent.

FHFA’s Watt Charts Tricky Middle Path Through Housing Market in Limbo

During his 21 years in Congress, Mel Watt helped usher in several major changes to the banking industry, from the Gramm-Leach-Bliley Act to the Dodd-Frank Act.

But his toughest and most divisive political battle still lies ahead in the fight over the government-sponsored enterprises — and there’s little end in sight.

As head of the Federal Housing Finance Agency, a job he took a little over a year ago, Watt must chart a short-term course for the still-troubled housing market, while he waits for his former colleagues on the Hill to come up with a more permanent solution.

So far, at least, key players on different sides of the debate have expressed measured support for his role as conservator of Fannie Mae and Freddie Mac.

 

“It’s a tough job. He’s in the middle between two competing forces — one that wants Fannie and Freddie to do more, and another that wants the GSEs to disappear,” said John Taylor, president and chief executive of the National Community Reinvestment Coalition.

But he has also received significant criticism from those who worry his actions are making it more difficult to resolve the future of Fannie and Freddie.

As director of the FHFA, Watt will not dictate what ultimately happens to the GSEs — that’s a mandate for Congress that has so far been left unaddressed. But his moves do help shape what will occur.

For those who would like the GSEs to be taken out of the equation entirely, Watt’s efforts to ease credit standards and spur new lending are seen as shortsighted.

“He’s certainly not focused on shrinking their footprint,” said Mark Calabria, director of financial regulation studies at the Cato Institute. “Almost everything he has done makes it more likely that the status quo continues — he’s not exactly being an agent for change.”

Watt’s stance is a departure from that of his predecessor, Edward DeMarco, who spent more than four years as acting director focusing on protecting taxpayers from additional losses and reducing the GSEs’ presence in the mortgage market ahead of future legislative action.

While Watt has said he also views those goals as crucial, he’s indicated that he plans to balance that with efforts to support the current functioning of the GSEs, and thus keep their dominate position in the housing market.

“FHFA is focused on how we manage the present — the present conservatorships of the enterprises and the present housing finance market under the present statutory mandates,” he said at his first public speech in May.

“We have reformulated this goal [to reduce the GSEs] so that it no longer involves specific steps to contract the enterprises’ market presence, which could have an adverse impact on liquidity. Instead, the ‘reduce’ goal focuses on ways to scale back Fannie Mae and Freddie Mac’s overall risk exposure. This approach allows us to meet our mandates of upholding safety and soundness and ensuring broad market liquidity.”

Earlier this month, he reported that the GSEs completed credit risk transfers last year on mortgages with more than $300 billion in unpaid principal balance, with roughly $270 billion in transfers expected for 2015.

“You can see that there should be multiple opportunities for private sector involvement in the risk transfer space in 2015,” he told attendees at the Goldman Sachs Housing Finance Conference.

But the shift in strategy still comes at a potentially difficult time for the agency, after Fannie and Freddie reported sharply lower quarterly earnings last month, compared to a year ago. The bailout agreement for the GSEs includes a provision that shrinks their capital cushions over time, increasing the chances that the enterprises could need another draw from Treasury sometime in the coming years. FHFA’s own watchdog recently released a report echoing those fears.

GOP lawmakers and other critics argue that Watt’s policies — particularly a plan allowing the GSEs to buy mortgages with downpayments as low as 3% — would put even more risk on the books.

At the same time, those on the other end of the political spectrum would like to see the agency going further to help homeowners who are still struggling and those without access to credit.

Senate Democrats, presumably a natural ally for the former North Carolina congressman, blasted Watt in November for not yet implementing principal reductions for underwater borrowers — a decision he’s said he’s still weighing.

“You’ve been in office for nearly a year now, and you haven’t helped a single family — not even one — by agreeing to a principal reduction,” Sen. Elizabeth Warren, D-Mass., said at the Senate Banking hearing in November. “Why has this not been a priority for you?”

Some in the industry — even those who are otherwise supportive of Watt — have raised similar concerns about timing. The director’s term is limited to just five years, and the agency is involved in a number of challenging, long-term projects, like creating a single security for the two GSEs.

“If I was to make any element of complaint, my desire is for him to move faster on more complicated issues, or time could work against you,” said David Stevens, president and chief executive of the Mortgage Bankers Association. “Some of these projects are highly technical and complex, and they need to get done while his team is there.”

The agency has also spent more than a year deciding whether to adjust guarantee fees, after Watt suspended an earlier plan by DeMarco to raise them. He halted the decision in December 2013, before he was even officially sworn in.

An agency official said the delay is to ensure it can think the issue through.

“As Director Watt has said previously, FHFA moves at a responsible pace that allows for thorough evaluation of these important issues,” an agency spokesperson said.

That said, observers noted that the pacing so far aligns with Watt’s general approach to leadership — which tends to be careful and thoughtful.

“Anybody who thought that Director Watt was going to go over to FHFA and rework the way things are done without very thorough review and cautious thinking doesn’t understand who he is,” said Sheila Crowley, president and chief executive of the National Low Income Housing Coalition. “Many people are disappointed he didn’t take more decisive action quicker, but I think he’s a person…to be utterly fair and completely scrupulous in his evaluation of how it is that he can operate within the law.”

Supporters have lauded his efforts to seek input on various policy decisions and his willingness to meet with a wide range of groups, so that he can weigh competing viewpoints. He’s also held a number of town halls across the country to talk to the public about the Obama administration’s refinancing programs.

“I want to emphasize that getting and evaluating input from stakeholders is a crucial part of our policymaking process,” Watt told the House Financial Services Committee in January.

His deliberate approach has helped Watt chart a course down the middle of the policy road. That’s not to say that everybody agrees with his decisions, but that he’s managed to keep some of the people happy some of the time — a feat given that mortgage finance has become such a political lightning rod.

“He hasn’t played into the emotions of any specific stakeholder group, and instead he’s really chosen to focus his time on quality measures that would be truly impactful and beneficial to the long-term health of the financial system,” Stevens said.

In particular, the former Democratic lawmaker has proven more industry friendly than some might have predicted.

“Mel has surprised even some of his harshest critics in his performance on the job,” Stevens added. “There was an expectation by some harsh observers that he might come into role and use it as a pulpit for purely social causes.”

Steps like clarifying rep and warranty standards, expanding risk-sharing efforts and halting a plan to lower loan limits have been a boost to industry. Indeed, the agency has accelerated its pace for issuing proposals and making key decisions over the second half of the year, as Watt has found his footing.

“Because he was an Obama administration pick after numerous affordable housing groups pushed the White House to act, people assumed he was going to be of that same mindset,” said Brandon Barford, a partner at Beacon Policy Advisors. “But one of most important companies near his district was Bank of America, among other financial firms. He’s had decades of experience interacting with financial institutions in Charlotte and North Carolina more broadly.”

Meanwhile, Watt’s also won praise from housing groups for his decision to capitalize two affordable housing trust funds with contributions from the GSEs, a move his Republican former colleagues on the House Financial Services Committee have decried.

Looking ahead, the only thing that’s certain is that Watt will continue to come under fire, regardless of his decisions on g-fees, principal reductions or other key issues facing the agency. Those policy choices are ultimately what will determine whether the moderate path can help stabilize a market still in recovery and a housing system still in limbo.

“We have a general understanding of his direction, but by no means full comprehension of what his full time as director will produce,” said Isaac Boltansky, a policy analyst at Compass Point Research & Trading. “He mostly struck a good balance in his first year, but we still don’t know what kind of director he’s going to be, because a good chunk of that first year was focused on gathering data and input.”

Nine Best Practices for Building a Healthier Home

From radon mitigation and proper ventilation to moisture control, these strategies are often overlooked in builders’ battle for superior indoor air quality.

 

In light of the recent Lumber Liquidators controversy, buyers are demanding homes that won’t make them sick. This means that builders, who are pushing to make their homes energy efficient and airtight, must be extremely careful about the products and materials they use. It’s the Catch 22 of energy-efficient construction: Well-sealed buildings can trap in toxic chemicals, mold, pollen, and other irritants.

The first thing builders should do to mitigate indoor air problems is to ask manufacturers what is in their products. Asking for transparency may have the single greatest impact on the health of homes across the country. As more manufacturers voluntarily disclose what is in their products, their competitors will have to follow suit. There are programs such as the Declare label by the International Living Future Institute that offer manufacturers low-cost ways to certify their products with a third-party label.

At my Chicago-area home building company, Evolutionary Home Builders, we apply quality control through extensive performance, health, and building science testing to ensure all projects are third-party certified to programs such as LEED and Passive House. We spec products (other than framing lumber) that have specific indoor air quality testing certification through programs like GreenGuard and Declare.

While these certifications assure us that the products we’re using are made to a higher level of health, specification of the right materials is only one step in our game plan to ensure good indoor air quality. It takes a range of building science-based strategies—from proper ventilation and moisture control to radon mitigation and conscientious construction practices–to make sure a home is healthy. Here is our checklist:

A blower door test determines a home's air tightness. The best time to conduct a blower-door test is after a home is insulated but before the drywall is hung.

A blower door test determines a home’s air tightness. The best time to conduct a blower-door test is after a home is insulated but before the drywall is hung.

1.      Conduct a third-party laboratory certified indoor air quality test. Testing for the indoor air quality by using a professional third party lab will give you a performance metric to compare and improve homes.  Consider testing for formaldehyde, tVOC, particulates, and mold.

2.      Keep air changes to a minimum. Ensure that the home is built to perform at least less than 1.5 ACH@50 Pascal. (Click here for more on air change calculation.) We like to build to the Passive House required .6 AHC@50, but 1.5 is a good goal to shoot for if you are just starting to measure this metric.  Having a tighter envelope prevents dust, insects, and airborne particulate from entering the dark, drafty corners of most homes.

3.      Provide balanced and distributed energy (or heat) recovery ventilation. Installing a balanced ventilation system with MERV filtration is critical for superior comfort and air quality. This ensures there are no pressure imbalances on your home. For example, an exhaust-only ventilation plan requires bringing in the makeup air somewhere. If it’s a tight home, you know it’s not evenly distributed or filtered correctly. Additionally, having your ventilation system distributed throughout the home will ensure that fresh air gets to all the places you would want it to, like above your beds.

Ventilation systems like this heat recovery ventilator from Zehnder America bring fresh air in to well-sealed homes.

Ventilation systems like this heat recovery ventilator from Zehnder America bring fresh air in to well-sealed homes.

4.      Ensure the walls are modeled using the WUFI tool to guarantee proper dry out potential. WUFI is a hydrothermal modeling tool that models your exact building assembly with all of the layers to your exact climate. It runs a multi-year model that shows if there is a risk of condensation in your wall and assesses the potential for mold growth. Condensation within your wall is moisture, and moisture leads to building failure.

5.      Install carbon monoxide detectors on every floor and within 15 feet from all bedrooms. 

6.      Install a radon vent below the basement slab that vents through the roof. A passive radon vent installed through the roof is cheap and easy.  We takes it a step further and also run in a junction box next to the pipe in the attic in case a homeowner needs or wants to add an exhaust fan to make it an active radon mitigation system.

7.      Work to eliminate condensation, which can lead to mold growth. A third of the home’s R-value should be installed outside the air barrier to ensure any condensing surfaces in the wall assembly are eliminated. This is a good rule of thumb for colder climates zones and WUFI is a great tool to double check that the system is working properly. The exterior insulation will warm the exterior sheathing so that the inside face of the sheathing does not become a condensing surface.

Proper window flashing keeps interiors dry and free of mold.

Proper window flashing keeps interiors dry and free of mold.

8.      Take photos of all wall cavities prior to insulation. Transparency is a great way to show your clients you stand behind your product. I always shake my head when we remodel a home and find garbage and sawdust piles inside the wall cavities, which guarantee dirty, dusty homes. Taking images reinforces that you take pride in the cleanliness of your homes, and also gives your clients exact locations of all mechanical systems and studs. This information is key for hanging pictures and for future remodels.

9.      Flash exterior penetrations, windows, and roof to help move bulk water away from the home. Unfortunately, American homeowners have become accustomed to leaky windows and roofs, and that needs to change. If exterior water is finding its way into your homes, it cannot be considered a healthy home.

Producer Prices in February – Falling Prices, Except for Gypsum

The Bureau of Labor Statistics (BLS) released the Producer Price Indexes (PPI) for February. Inflation in prices received by producers (prior to sales to consumers) declined 0.5% in February. The decline was dominated by a decline in prices for services and within services prices for trade, transportation and warehousing. Prices for goods also declined led by falling food prices. Energy prices leveled off in February after declines accelerated through the second half of last year and reached -10.3% in January.

Softwood lumber prices declined 1.6% in February. The Random Lengths Framing Lumber Composite Index points to further declines in March. Analysts point to softer than expected US single family construction in 2014, inventory management on the part of distributors, and softening overseas markets as factors. Additional declines will be tempered going forward by possible log shortages and continuing transportation bottlenecks.

Prices for OSB declined 2.9% after modest upticks in the prior three months. The return of mothballed capacity since 2013 has supply outpacing demand. Random Lengths indicates additional declines in March. The PPI for OSB indicates a 46% decline from the price peak in March 2013.

Prices for gypsum jumped 3.9% in February after a 4.3% increase in January reaching an all-time high. Gypsum prices are now 5.4% higher than their 2006 housing boom peak while single family housing starts remain depressed at roughly half the normal level of production.

blog ppi 2015_03

5 Green Products and Techniques Worth Exploring

High-performance products are at the heart of every green home, but their prices can induce sticker shock. Here are a few cost-effective solutions that are favorites of experienced green builders.

 


Combination products. Green pros say there’s nothing like products that do two things at once, such as Huber Engineered Woods’ ZIP System sheathing with radiant barrier, Owens Corning’s Energy Complete air-sealing and insulation system, and CertainTeed’s AirRenew gypsum board that converts VOCs into inert compounds.

Low-VOC paints and finishes. Zero- and low-VOC paints, caulks, and sealants generally don’t cost much more than their traditional counterparts, and they give customers peace of mind knowing they won’t add toxic chemicals to their homes.

Ductless HVAC units. Also called mini-split or VRF systems, these units deliver air into specific zones instead of routing it through ducts. They cut heating and cooling costs by up to 30 percent compared with ducted systems, provide precise temperature control, and free up space that normally is taken up by bulky ducts.

 

 

Structural insulated panels (SIPs). This building system consists of an insulating foam core sandwiched between two structural facings, usually oriented strand board. Builders love how SIPs save time and labor while providing superior insulation that can lower heating and cooling bills by up to 50 percent compared with stick framing.

 


 

Ductless HVAC units. Also called mini-split or VRF systems, these units deliver air into specific zones instead of routing it through ducts. They cut heating and cooling costs by up to 30 percent compared with ducted systems, provide precise temperature control, and free up space that normally is taken up by bulky ducts.

New Home Sales Trending at Post-Recession Highs

new-home-sales_jan-15[1]

 

 

Sales of newly built, single-family homes dropped 0.2% in January to a seasonally adjusted annual rate of 481,000 units from an elevated December reading, according to newly released data by HUD and the U.S. Census Bureau.

“The fact that January sales numbers maintained the gains we made in December is encouraging news, especially considering harsh weather affecting certain parts of the country,” said NAHB Chairman Tom Woods.

“In a promising sign, new home sales have been trending at post-recession highs for the past two months,” said NAHB Chief Economist David Crowe. “As the economy strengthens and mortgage rates remain low, we can expect continued upward movement in the housing market this year.” The inventory of new homes for sale was at 218,000 in January, which is a 5.4-month supply at the current sales pace.

Regionally, new home sales rose 19.2% in the Midwest and 2.2% in the South. Sales dropped 0.8% in the West and 51.6% in the Northeast, most likely due to adverse weather conditions in that geographic area.

See the Eye on Housing blog for more analysis.

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