The August BuildFax Housing Health Report (BHHR) revealed a gradual improvement in property maintenance across the U.S. housing stock. After six months of declining activity, maintenance activity and spend have now risen for two consecutive months. Maintenance is not only a strong indicator of consumer confidence, but it also provides insight into the health of the residential housing market. When property risk improves, so does the underlying asset class, which is valued at almost $35 trillion.
New and Existing Housing Supply
Single-family housing authorizations increased declined 1.06% month over month in August and 4.17% year over year, which is indicative of the continuing housing slowdown. The trailing three-month outlook decreased for the third straight quarter, dropping 2.29%. These declines contrast the rapid new-housing growth from just a year ago. As global and U.S. economic tensions cause more uncertainties, the housing market is softening and slowly becoming a buyer’s market.
New and Existing Housing Supply Activity, August 2019
- Single-family housing authorizations decreased 4.17% year over year.
- Existing housing maintenance volume increased 1.00% year over year.
- Existing housing remodel volume increased 1.16% year over year.
Reactive Maintenance Activity Sheds Light on Healthy Markets
As conversations around a future recession gain momentum, it’s important to monitor maintenance activity in the U.S. housing stock, which is one of the largest asset classes in the U.S.
Typically, a property experiences a natural deterioration timeline, which causes maintenance to increase at a relatively steady pace. However, in some regions, structures are subject to accelerated deterioration from external factors – like natural disasters. When accelerated deterioration occurs, a period of accelerated maintenance activity is expected to follow, but only if the market is healthy.
North Carolina, which experienced two severe bouts of weather in late 2018, is a prime example of such a market. Over the past year, North Carolina was hit with severe convective storms, Hurricane Florence, and most recently Hurricane Dorian this past month. Our research revealed that, thus far, North Carolina has shown a health reaction to these events. For instance, following Florence, maintenance in the state jumped 34.84%.
For more insight on the health of the U.S. housing market and the positive implications of improving property risk, download the August 2019 report.