As we hinted in last month’s update, the Federal Reserve did increase the Fed Funds rate effective November 2 by .25% to 4%. In late November, a representative of the committee reported that further increases will be necessary to accomplish their inflation reduction objective. While not linked directly with treasury rates, the increased Fed Funds rate has understandably pushed up the yield curve. Mortgage rates early in November eclipsed 7%. When coupled with the higher cost of construction, home affordability has been dramatically impacted, especially for entry level buyers. Economists believe that some move up and custom buyers are on the sidelines seeking more certainty about the future.
Ali Wolf shared, in Zonda’s November 22 New Home update, “Uncertainty does not mix well with making the largest purchase of one’s life. Zonda’s newly released national new home sales figures captured 467,082 homes sold in October on a seasonally adjusted annual rate, down 34.1% compared to last year”. She went on to say, “Builders are in the business of selling homes, so we are seeing an increase of using both price cuts and incentives to help get buyers off the sidelines. Mortgage rate incentives are proving to be the most effective as they solve one of the biggest issues today: the 70%+ increase in the monthly mortgage cost since the beginning of the year given higher home prices and borrowing costs”. Click HERE to read the full report. Zonda shared that this level of home sales is like the level experienced in 2016.
On November 21st, Fannie May published a housing forecast for 2023 and 2024. They reported, “For our inaugural 2024 home sales forecast, we project total sales of 5.25 million units, up 18.6 percent from our forecast for 2023, reflecting our expectations for a modest pullback in mortgage rates and a broader economic recovery, as well as an ongoing housing supply deficit helping drive new home sales. Our home sales forecasts for 2022 and 2023 are essentially unchanged from last month, at 5.67 million and 4.42 million units, respectively” (a 22% decline). Click HERE to read the full report. From my study of economic forecasts, all predict we will experience “a correction” in housing in 2023 but believe housing will recover reasonably quickly. Forecasts vary widely by geography, size of home and build pace over the last two years.
How can affordability improve to motivate new buyers? As Ali shared above, builders are changing how they are selling homes; smaller footprints, upgrade and financing incentives and taking advantage of lower lumber/panel prices. Material prices for most non-lumber products are still holding (see below for a few price increases that have been announced). I’ve read that economists believe that the coming housing downturn may eventually force pricing down for other material inputs. In addition, Ali Wolf published an informative article about mortgage rates in the November issue of Builder Magazine. As we’ve shared often mortgage rates tend to track to the 10-year treasury rate. She shared that, “The spread between the 30-year fixed rate mortgage and the 10-year Treasury yield averaged 2.9% for the month of October, 1.2 percentage points above the historical average and 1.4 percentage points above levels this time last year. The wider spread is linked to the 7% interest rates and the notable housing slowdown across the country as consumers respond to the higher cost of homeownership. If the spread were to normalize back to the historical average, we would be looking at a mortgage rate in the mid-5s compared with the low-7s”. Accordingly, when we experience evidence of moderating inflation, a decrease in mortgage rates is feasible. Click HERE to read the full article.
I’ve included articles from economists I follow in todays and recent updates, as the depth and breadth of the trending housing decline is difficult to predict. Please forward me reports or insights you find helpful in navigating this market.
Lumber and panel prices are trending at historical lows. With the unpredictability of housing in 2023 futures pricing is also up one day and down the next.
You will see below that product availability and lead times have improved year over year. However, we are still experiencing some extended lead times on products still being affected by supply chain restraints. Lumber and panels have returned to normal lead times and the drastic swings in pricing have settled down.
Thanks for your feedback on this update as we seek to serve you.
Regards, Bob Wood, President
P: 717-792-2500 | E: [email protected]
- Gallery lead times are currently 4-7 weeks.
- Omega / Dynasty lead times are currently 5-8 weeks for framed & inset cabinetry.
- Legacy lead times are 8-9 weeks.
- Timberlake lead times are 4-6 weeks.
- Quality Cabinets lead times are 2-4 weeks. Quality Woodstar lead times are 8-9 weeks.
- Aristokraft lead times are 3-5 weeks.
- WOLF Cabinetry lead time is 1-6 weeks.
WINDOWS & DOORS:
- Andersen Windows & Doors has announced a 4.5% price increase effective on all orders placed after January 12, 2023. Lead times on 100 Series are 4-6 weeks, 200 Series are 2-4 weeks, 400 Series are 3-14 weeks, A-Series are 12-14 weeks, E-Series are 9-11 weeks, MultiGlide are 9-11 weeks, and folding doors are 21-23 weeks.
- Marvin Windows & Doors lead times on the Elevate Collection is 12-13 weeks, Essential Collection is 9-10 weeks, and Signature Collection is 18-25 weeks.
- Ply Gem lead times are 8 weeks for 1500 Series Single Hung and 6 weeks for Pro Classic Double Hung. Due to current supply chain challenges, they are suspending production of extruded black exterior for all 1500 Series vinyl collection window and doors.
- Simonton’s lead time is 3-5 weeks on the new construction series and 4 weeks on the replacement series.
- Silver Line lead time is 2-4 weeks on single hung and 2-4 weeks on double hung. Black & bronze color coated are an additional 3-4 weeks out.
- Atrium lead time is 3 weeks on new construction double hung, 4 weeks on new construction single hung 150/160 Series, 7 weeks for black laminate and 7 weeks on SH 130 Series.
- 7-D Windows lead time continue to be 2 weeks. Tempered glass units are 3 weeks. Contact your sales rep should these lead times enable you to achieve a quick turn project.
- Lead times are 4-6 weeks depending on style and color selection.
- Insulation continues to be on allocation and supply issues will more than likely continue into next year.
- Knauf has announced a 10% price increase effective December 2nd.
- Effective January 2nd, Huber Engineered Woods will adjust pricing on AdvanTech and ZIP System accessory portfolios ranging from 1-5%.
- Myers is currently taking orders for December 22nd on CertainTeed siding deliveries. They have also announced several product discontinuations. Please click HERE for additional details.
- James Hardie is making adjustments to product availability and lead times to better serve the market. Effective January 3, 2023, prices will increase 5-7% on most Hardie products and 7-10% on specialty products.
- LP SmartSide siding and trim products will have a 3-5% price increase effective January 2nd.
CAULKING & ADHESIVE:
- Caulking continues to be hard to locate. The lack of raw materials needed to manufacture caulking has put a strain on the supply chain.
- Allegion hardware (Schlage, Falcon, Dexter) will have a 5-10% price increase in February, 2023.
ANDERSEN E-SERIES LINE NOW
INCLUDES WHITE OAK
In true style, Andersen has expanded their E-Series product line to accommodate the latest in design trends. The new white oak species option allows consumers to choose from a variety of factory finishes, including a clear coat, to achieve a neutral, natural interior.
White oak’s whitewash appearance creates a light, relaxed and versatile look for a range of styles including contemporary, mid-century and the growing Japandi and Scandi styles.
Trending at an all-time high, this new option is going to be a huge hit!
Click HERE to learn more!
ARE BARN DOORS OUT OF STYLE?
Think this farmhouse staple has already had its heyday? Think again! Here’s why barn doors are still in style.
– Elevate Appearance: transform any room with a stylish design element.
– Add Privacy: define what spaces are open or easily hide areas from view.
– Save Space: glide smoothly and silently on a track, giving you less wasted space.
The best part? With Masonite’s all-in-one barn door kits, that includes hardware, they are quick and easy to install! Interested?
Check them out HERE.
NEED THE LATEST LOOK IN FLOORING? WE CAN HELP YOU CREATE CONFIDENTIALLY!
The sophisticated look of concrete flooring is on-trend & appears to have true staying power. From geometric to floral to old-world inspired, there’s a style for any décor.
Plus, it performs like a dream! Daltile’s concrete look tile are waterproof, scratch, stain, fire & slip resistant.
We featured Quartetto Cool Pétalo (QU23) in our photo. With a handmade look, this porcelain tile collection is available in 24 unique colors and decorative patterns in both warm and cool palettes.
Learn more HERE.