The July BuildFax Housing Health Report (BHHR) revealed that amidst repeat declines in new construction activity, the downward trend in maintenance activity is slowing. July in particular experienced a year-over-year uptick in maintenance.
While one month of increasing maintenance activity is not a trend, this is a strong indicator of consumer confidence and may signify continued growth in the U.S. housing market. The growth in maintenance activity was spurred by a substantial increase in roof repairs. Year over year, national roof maintenance activity rose 15.97% – the highest it has been since the months following 2017’s Hurricane Irma.
New and Existing Housing Supply
Single-family housing authorizations increased slightly (0.32%) month over month but declined 4.18% year over year, which is indicative of the continuing housing slowdown. The trailing three-month outlook decreased for the ninth consecutive month, dropping 4.16% from June to July 2019. These declines contrast the rapid new-housing growth from just a year ago. However, even as new construction is slowing, it’s also increasingly important, especially for insurance carriers, to track the health of the existing housing stock.
New and Existing Housing Supply Activity, July 2019
- Single-family housing authorizations decreased 4.18% year over year.
- Existing housing maintenance volume increased 2.36% year over year.
- Existing housing remodel volume increased 4.30% year over year.
Despite Declining New Construction, Maintenance Activity Sees Uptick
Maintenance is a must-watch indicator when evaluating the health of the existing housing stock and monitoring shifts in consumer confidence. While maintenance encompasses updates to a property’s major systems – roof, electrical, mechanical and plumbing – roof maintenance and the resulting roof condition are most highly correlated to the frequency and severity of insurance claims. When a homeowner makes premium-impacting repairs to their roof, it substantially improves the health of the structure and provides a carrier with a more comprehensive picture of the risk on their portfolio.
Roof is also a strong indicator of risk in the event of catastrophe. This is particularly notable with January 1 catastrophe reinsurance renewal discussions on the horizon. Halfway through the third consecutive year of heavy catastrophe-related activity, carriers are increasingly looking to third-party data to bolster their reinsurance strategy.
Month over month, roof maintenance activity increased 17.87% – a particularly rapid increase in activity. The primary driver of the uptick in roof maintenance activity, which is the highest it has been in recent years, is 2019’s severe wind and hail events across the Midwest and Southeast U.S.
Although 2019 hasn’t yet reached the height of hurricane season, recent BuildFax analyses point to widespread flooding and hail damage as a potential driver of significant increases in repair and maintenance activity across the nation.
For more insight on the health of the U.S. housing market and the positive implications of roof maintenance activity, download the July 2019 report.