Author: Chad Symens

November 20, 2014

The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), reached 54 in the third quarter, four points below the previous quarter’s reading.  This is the 11th quarter with a reading of 50 or above.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100.  The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums.  Although all three components fell from 2014 peaks in the second quarter, all remain at 50 or above.  The MPI component tracking low-rent units dipped one point to 51, market-rate rental units fell four points to 64 and for-sale units dropped six points to 50.

“Despite the slight drop in the index, multifamily developers remain positive about where the market is headed,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, California, and chairman of NAHB’s Multifamily Leadership Board.  “Current growth in employment is strong enough to fuel demand for multifamily housing.”

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, rost three points to 41, with higher numbers indicating higher vacancies.  After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.

“We are seeing the MPI return to the mid-50s level where it has been for much of the past three years,” said NAHB Chief Economist David Crowe.  “The moderation in multifamily builder sentiment aligns with a leveling off in production at a historically high level sufficient to keep up with rental demand.”

Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing invormation on likely movement in the Census figures one to three quarters in advance.

Source: National Association of Home Builders 

November, 2014

The biggest shopping weekend of the year is only days away and retailers are gearing up for another Thanksgiving weekend of holiday shopping and promotions.

Since the recession, retailers competing for shopping dollars and market share have had to rethink tried-and-true holiday marketing strategies.  Good prices, great value, unique product assortment and convenience are just a few of the aspects that contribute to happy holiday shopping experiences.

Some companies are generating buzz and responding to consumer demands by opening on Thanksgiving Day, while others look to promote their brand by resisting early openings on Thursday.

Here’s a look at key numbers from Thanksgiving Day and Black Friday in 2013:

• 44.8 million: Consumers who shopped on Thanksgiving Day, up 27 percent from 2012.
• 92.1 million: Consumers who shopped on Black Friday in 2013.
• $407: Average amount spent by holiday shoppers from Thanksgiving Day to Sunday, down 4 percent from 2012.
• 248.7 million: Number of shoppers who were in stores and online over Thanksgiving weekend in 2013, up 0.5 percent over the previous year.
• 4.9 percent: Portion of holiday shopprs who were at stores by 5pm on Thanksgiving Day.
• 37 percent: Portion of holiday shoppers who were at stores by 12:01am on Black Friday, up from 28 percent in 2012.
• 64 percent: Portion of holiday shoppers who went out on Thanksgiving Day or visited stores by 10am on Black Friday.
• 45 percent: The amount of holiday shopping the average consumer had completed by the Sunday after Thanksgiving, up from 42 percent in 2012.

With more than $50 billion in sales on the line for just a single weekend during retail’s most competitive season, retailers will be looking for ways to wow their customers.  It’s too soon to say if the Thanksgiving Day shopping trend will fade or if the buzz will build in 2015, but this year, we’re betting on another strong turnout.

Source: National Retail Federation

November 19, 2014

Single family housing production in October reached its highest level since November 2013 while the more volatile multifamily sector brought combined nationwide starts activity down 2.8 percent to a seasonally adjusted annual rate of 1.009 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“The rise in single-family starts is more proof that the economy is firming and consumer confidence is growing,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  “We expect continued upward momentum into next year.”

“The increase in single-family starts shows that the housing market continues to recover at a steady, gradual pace,” said NAHB Chief Economist David Crowe.  “On the multifamily side, production is stabilizing above historic levels as demand for rental housing increases.”

The 2.8 percent decline in overall starts in October was due primarily to a 15.4 percent decline on the multifamily side, which brought that sector’s annual production pace to 313,000 units on a seasonally adjusted annual basis.  Meanwhile, single-family starts posted a 4.6 percent gain to 696,000 units.

Regionally in October, combined housing production dropped in the Northeast, Midwest and West, with respective losses of 16.4 percent, 18.5 percent and 10.9 percent.  Total production rose in the South by 10.1 percent.

Issuance of building permits registered a 4.8 percent gain to a seasonally adjusted annual rate of 1.08 million units in October.  Multifamily permits rose 10 percent to 440,000 units while single-family permits increased 1.4 percent to 640,000 units.

Regionally, the Northeast and Midwest registered overall permit losses of 21.5 percent and 11.4 percent, respectively.  The South and West posted respective gains of 8.8 percent and 21.6 percent.

Source: National Association of Home Builders 

November 20, 2014

The Conference Board Leading Economic Index for the U.S. increased 0.9 percent in October to 105.2, following a 0.7 percent increase in September, and no change in August.

“The LEI rose sharply in October, with all components gaining over the previous six months,” said Ataman Ozyildirim, Economist at The Conference Board.  “Despite a negative contribution from stock prices in October, and minimal contributions from new orders for consumer goods and average workweek in manufacturing, the LEI suggests the U.S. expansion continues to be strong.”

“The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015,” said Ken Goldstein, Economist at The Conference Board.  “This is consistent with our outlook for relatively good, but not great, consumer demand over the near term.  Going forward, there are continued concerns about slow business investment and lackluster income growth.”

The Conference Board Coincident Economic Index for the U.S. increased 0.1 percent in October to 110.2, following a 0.3 percent increase in September, and a 0.1 percent increase in August.

The Conference Board Lagging Economic Index for the U.S. declined 0.1 percent in October to 124.9, following a 0.1 percent increase in September, and a 0.5 percent increase in August.

Source: The Conference Board

November 20, 2014

Americans are readying for the upcoming Thanksgiving weekend by making sure they have a menu for their family gathering and a complete shopping list for their weekend shopping activities.  According to NRF’s Thanksgiving Weekend Expectations survey, which provides a preliminary look at shopping expectations over Thanksgiving weekend, six in 10 (61.1%) say they will or may shop either Thursday, Friday, Saturday or Sunday, which equates to more than 140.1 million unique shoppers.  Expectations are similar to last year’s preliminary survey results of 140.3 million.

Specifically, 67.6 million holiday shoppers (29.5%) say they will shop, down slightly from 69.4 million who planned to do so last year, and 72.5 million (31.6%) say they will wait and see if the deals are worth it before they decide, up 2 percent over last year’s 71 million “maybe” shoppers.

“Consumers today want more than just the discounts they’ve been showered with since the start of the recession; they want exclusive offerings and a good reason to spend their discretionary budgets,” said NRF President and CEO Matthew Shay.  “We could witness a see change this holiday season as consumers’ reliance on extremely deep discounts over the biggest shopping weekend of the year shifts to more of a ‘wait-and-see’ mentality around what retailers will be offering on Thanksgiving Day and Black Friday.  We are positive retailers have a few tricks up their sleeve that will draw their customers to their stores and websites, deciding the deals are worth it after all.”

When it comes to preliminary expectations for when people will shop, of the 61.1 percent who will or may shop in stores and online over the weekend, 18.3 percent (25.6 million) say they will check out retailers’ Thanksgiving Day deals and shop Thursday, down from the preliminary 23.5 percent last year; 74 percent of those who plan to shop on Thanksgiving Day say they shopped on Thanksgiving Day last year.

Additionally, more than two-thirds (68.2%) will shop on Black Friday (95.5 million), two in five (42.9%) will shop on Saturday (60 million) and one in five (21.6%) will shop on Sunday (30.3 million).

For the first time NRF asked shoppers about their intentions to shop on Small Business Saturday.  The survey found of those shopping on Saturday, nearly three-quarters (72.7%) say they will or may specifically shop for Small Business Saturday.

“More than just a shopping day, Small Business Saturday highlights the millions of entrepreneurs and visionaries who help make retail the dynamic and community-focused industry that it is,” continued Shay.

Much talk has surfaced in the last few years over the number of young adults who shop on Thanksgiving, and this year millennials are indicating they are once again anxious to take advantage of what retailers have to offer.  According to the survey nearly eight in 10 (79.6%) 18-24 year olds will or may shop over the weekend, the highest of any age group.  Specifically, nearly one-quarter (22.6%) will shop on Thanksgiving Day, down slightly from 27.8 percent last year and 79.9 percent will shop on Black Friday, up from 71.5 percent who planned to do so last year.  Nearly three-quarters (73.2%) of 18-24 year olds say they shopped on Thanksgiving last year.

“For younger shoppers, shopping on Thanksgiving and Black Friday is as much a social experience as it is a buying mission.  While these shoppers may not have the biggest holiday budgets or the longest shopping lists, they still enjoy the ‘tradition’ of heading out with friends and family on two of retail’s most exciting shopping days.”

Source: National Retail Federation 

November 14, 2014

New stores, 3.9% same store sales growth and increased loyalty propelled Nordstrom to record third quarter sales.

The company’s total sales increased 8.9% to $3 billion thanks to the addition of new stores and a 3.9% same store sales increase that was driven by online growth.  Profits increased 3.6% to $142 million compared to $137 million while earnings per share increased 5.8% to 73 cents from 69 cents.

The company said sales at full line stores increased 0.5%, reflecting the addition of three new stores during the quarter and flat same store sales.  Nordstrom Rack sales increased 15% thanks to the opening of 16 stores and a 1.7% comp increase.  The greatest growth came from the company’s direct business which increased 22% as assortments were expanded.

The Nordstrom Rewards loyalty program continues to contribute to the company’s overall results as well.  Members shopped more frequently and spent more on average than non-members.  The company opened approximately 275,000 new accounts in the third quarter, an increase of 18% compared with the prior year.  With 4.2 million active members, sales from members increased 13% in the third quarter and represented 38% of sales compared to 37% the prior year.

The company ended the quarter with 118 full line stores and 167 Rack stores.

Source: Retailing Today.

November 14, 2014

October’s retail sales report helps strengthen the National Retail Federation’s holiday expectations for sales growth of 4.1 percent, and offers an optimistic look ahead for the busiest consumer spending time of the year.  According to NRF, October retail sales, excluding autos, gas and restaurants, grew a healthy 0.7 percent month-to-month seasonally adjusted over September, and 44 percent unadjusted year-over-year.  NRF also finds the three-month moving average for year-over-year growth is a steady 3.9 percent.

“Consumers regained the energy to spend again in October, removing some of the concerns surrounding the slower consumer spending results seen as of late,” said NRF Chief Economist Jack Kleinhenz.  “Much of the spending power stems from lower gas prices, accelerated job growth, wages and salary gains, and the recent rise in stock prices.  We expect that the next two months will bring forth confident holiday shoppers who have the ability and desire to spend on gifts and more.”

The Commerce Department found overall October retail sales increased 0.3 percent seasonally adjusted over September and 4.1 percent unadjusted year-over-year.

“Consumers have once again proven resilient to the pressures they are still facing from a slow-moving economic recovery, receiving a helping hand from lower costs at the pump and gains in the labor market,” said NRF President and CEO Matthew Shay.  “Moving forward, retailers will continue to find ways to entice holiday shoppers with great bargains while also focusing on other value-added promotions.  It is clear that Americans have the spending power, they just need to see continued improvement in the economy before they return to shopping habits from pre-recession.”

All business lines, excluding electronics, showed gains on a month-to-month basis.

• Clothing and clothing accessories sales increased 0.5 percent seasonally adjusted over September and a healthy 1.3 percent unadjusted from 2013.
• Non-store sales increased a robust 1.9 percent seasonally adjusted month-to-month, and 8.7 percent unadjusted year-over-year.
• Sporting goods sales increased a solid 1.2 percent seasonally adjusted month-to-month, and 3.6 percent unadjusted over 2013.
• Sales at electronics companies decreased 1.6 percent seasonally adjusted from the previous month, possibly as a result of fall-off from the Apple iPhone roll-out in September, but increased 2.8 percent year-over-year.
• Furniture and home furnishing sales increased 0.2 percent seasonally adjusted from September, and 2 percent unadjusted year-over-year.

Source: National Retail Federation

November 18, 2014

Builder confidence in the market for newly built single-family homes rose four points to a level of 58 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

“Growing confidence among consumers is what’s fueling this optimism among builders,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  “Members in many areas of the country continue to see increasing buyer traffic and signed contracts.”

“Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery,” said NAHB Chief Economist David Crowe.  “After a slow start to the year, the HMI has remained above the 50-point benchmark for five consecutive months, and we expect the momentum to continue into 2015.”

Dervied from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” fair” or “poor.”  The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.”  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components increased in November.  The index gauging current sales conditions rose five points to 62, while the index measuring expectations for future sales moved up two points to 66 and the index gauging traffic of prospective buyers increased four points to 45.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose three points to 44, the South posted a four-point gain to 62, and the West edged up one point to 58.  The Midwest registered a two-point loss to 57.

Source: National Association of Home Builders

November 13, 2014

The growth in gift card popularity is irrefutable, and this holiday season spending on tiny plastic or digital gift cards will top all previous records.  According to NRF’s Gift Card Spending Survey, the average person buying gift cards will spend $172.74, up from $163 last year.  Total spending is expected to reach $31.74 billion.  In an October NRF survey, 62 percent of shoppers said they would like to receive a gift card, making gift cards the most requested gift item eight years in a row.

“No longer impersonal or only about convenience, gift cards have become the perfect, practical gift item for millions of holiday shoppers,” said NRF President and CEO Matthew Shay.  “And, as the most requested gift item for eight years in a row, we’re sure there will be plenty of happy individuals this holiday season who can look forward to treating themselves to something shiny and new come January when retailers start to offer promotions on fresh new merchandise.”

According to the survey, shoppers will spend an average of $47.87, up from $45.16 last year.  Total spending on gift cards has increased 83 percent since NRF began tracking consumers’ intentions to buy gift cards as holiday gifts in 2003.

Gift cards are a go-to gift for consumers of all ages; the survey found adults 65+ will spend the most on gift cards at an average of $204.59.  Young adults between 18-24 years old will spend the least at an average of $113.75.  Additionally, men plan to spend significantly more than women on gift cards ($180.81 vs. $165.09 respectively).

“These days, shoppers simply love the idea of gifting someone they care about with a little ‘free money’ in the form of a gift card.  Consumers young and old want to find the best way possible to create a happy holiday experience for their loved ones, and gift cards are a great option every time.”

There are a plethora of options for shoppers when it comes to what type of card to get, and it is clear department stores, restaurants and coffee shops are among the most popular choice for gift givers.  According to the survey 37.7 percent of gift card buyers will give their loved ones a gift card from a department store, and 34 percent will give their friends and family the gift of a meal at a restaurant.  One in five (20.6%) will pick up coffee shop gift cards, 18.1 percent will give the gift of entertainment, such as a movie theatre gift card, and 18.9 percent will give gift cards to electronics stores.

Source: National Retail Federation

November 19, 2014

Lowe’s said its third quarter same store sales spiked 5.1% a day after Home Depot reported an even stronger increase.

Total company sales increased 5.6% to $13.7 billion driven by increased productivity of existing stores as evidenced by a 5.1% comp increase.  Home Depot said its third quarter same store sales increased 5.8%.  Lowe’s profits increased 17.3% to $585 million while earnings per share increased 25.5% to 59 cents and were aided by $900 million in share repurchase activity.

“We are pleased with our performance, and continue to be cautiously optimistic about the home improvement landscape,” said Lowe’s chairman, president and CEO Robert Niblock.

Looking ahead, the company said it expects full year sales to increase 4.5% and same store sales to increase 3.5% to 4%.  The company plans to open six home improvement stores and four hardware stores this year.  Lowe’s currently operates 1,836 home improvement and hardware stores.

Source: Retailing Today