Home Sales Reports: Making Sense or Nonsense?

Home construction and sales drive the woodworking industry, and the U.S. economy as well. Demand for flooring, moulding, windows, doors and cabinets are created by home construction and, increasingly, by remodeling, while residential furnishing sales revolve around new and existing home sales.

Yet reports on home sales and construction seem to contradict each other – with numbers up one day and down the other.

Part of the problem is the design of housing reports themselves, since some look backward, and others forward, and often the reports compare apples to oranges.  

For example, the Commerce Department reported April 24 that sales of new homes fell  7.1 percent in March 2012. How come sales fell? Because simultaneously the Commerce Dept. issued revised figures for February 2012: instead of falling 1.6 percent as originally reported, they spiked 7.5 percent.

And those March 2012 figures of new home sales? Though they dropped from February, they were 7.5 percent higher than March the year prior. 

And on the same day, contracts to buy homes rose 4.1 percent in March, according to the National Assn. of Realtors, which helped boost the stock market and shares of homebuilders like Lennar and Pulte. 

We’re putting more stock in two other forecasts. One is a prediction of a 10 percent rise in 2012 housing starts for Canadian and U.S. combined, made by the APA (the group that represents plywood, MDF and oriented strandboard, and laminated veneer and timber makers).   Link  This will drive a 5 percent increase in glulam lumber; a 7 percent rise in structural panels and engineered wood; a 4 percent uptick in laminated veneer lumber; and an 11 percent increase in I-joist sales.

Housing formation is the other key indicator.  Census Bureau figures show an increase in household formation during the first quarter, with 1 million new households established, either renters or owners.  Housing analyst Thomas Lawler says it is the biggest increase in households since 2006, reports the Wall St. Journal.