Maintenance and remodeling activity continue to increase amid decreasing single-family housing authorizations and housing supply, according to BuildFax. The company's August Housing Health Report found national maintenance activity increased 1.0 % year over year (YOY) and remodeling activity increased 1.2% YOY. Maintenance activity, closely correlated to consumer confidence, has experienced three consecutive months of growth, potentially offsetting concern from sliding recession indicators.
After a period of steep drops in annual new construction activity that began last December, the rate of declines for single-family housing authorizations has slowed in recent months. Nonetheless, these declines are causing a ripple-effect in other areas of the housing sector. For instance, the decreased housing supply and consumer hesitation in a tumultuous market has already begun to shift the sector towards a buyer’s market.
“As declines across key economic indicators hint at an economic slump, talk of a potential recession has amplified. It’s difficult to definitively say whether one is imminent. However, heightened tensions surrounding a probable recession has put increased scrutiny on the declining single-family housing authorization index, which has a high correlation to historical recessions,” says BuildFax CEO Holly Tachovsky. “The potential shift in residential housing towards a buyer’s market is one example of the market reacting in a tangible way to these declines.”
“On the other hand, existing housing maintenance—a gauge of consumer confidence—is now rising. This suggests that U.S. homeowners have enough confidence in the market to embark on substantial property updates,” says Tachovsky. “This is good to see, especially amidst this year’s severe weather events, as maintenance activity improves the residential housing stock—an asset class that’s valued at more than $35 trillion.”
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