Home-building projections up for interpretation - Brief Article

Home Channel News, Feb 5, 2001

After a four-year run that carried U.S. housing starts from 1.35 million units in 1996 to 1.67 million units in 1999 (a 13-year high), starts fell 4.4 percent in 2000 to an annual rate of 1.59 million.

Both single-family and multifamily starts softened in 2000. Single-family home-building activity fell 5.4 percent to 1.26 million units -- its lowest point since 1997. The more volatile multifamily housing market, however, experienced only a marginal decrease last year, to 330,000 units from 332,000 in 1999.

No region was immune to last year's housing decline. Starts fell by 7.9 percent in the Midwest and 4.8 percent in the South. The declines in the Northeast and West were much smaller though, at 1.6 percent and 1.4 percent, respectively.

The news did not catch many by surprise, as several industry participants had predicted a downturn.

"Housing production in 2000 was right in line with our projections for a modest slowdown to a still solid pace following two years of very strong activity in 1998 and 1999," said Robert Mitchell, who serves as both the president of the National Association of Home Builders and a Rockville, Md.-based home builder.

As builders and dealers begin their 2001 campaigns, there are conflicting signs about the current health of the home building industry. And how one interprets the information depends on his or her personality.

The glass-half-empty types see the 4.4 percent drop in 2000 housing starts as a sign of more trouble to come. The glass-half-full crowd looks at the way the year ended, with increases in November and December housing starts, and figures brighter days on the horizon.

The optimists see that 30-year mortgage rates fell to just above 7 percent in January 2001, a big improvement over last year, when rates reached as high as 8.64 percent in May. The doubters, however, are worried that building permit applications, often a measure of future construction activity, declined 6.6 percent in December 2000 and 5.6 percent for the full year.

A consensus will probably not develop until one or a few crucial factors fall into place: the new administration, and any laws or policies it seeks to address, takes office; January and February housing starts are reported; builders, dealers and suppliers meet at the many regional and national shows and discuss the marketplace; and home-building activity picks up (or doesn't) as winter fades and the busy seasons begin.

Seigle's makes the best 01 a challenging year

Seigle's Building Centers, a pro dealer with six retail stores based in Elgin, Ill., recently reported that 2000 revenues grew 3 percent to $196 million. While the growth may appear minimal to outside eyes, company president Mark Seigle expressed satisfaction with the dealer's results.

"Faced with daunting competition [in its Chicagoland markets] and 30 percent deflation in building materials, we are extremely proud of our 2000 results," Seigle said. Other 2080 accomplishments include Seigle's acquisition of EVCO Supply, one of Chicago's largest wood window distributors.

For 2001, Seigle's 120th year in business, the dealer plans to open a kitchen and millwork showroom store in Morton Grove, Ill., and continue its growth by acquisition.