Economy Stronger, But Not Robust

September single-family construction spending fell for the fifth consecutive month as a result of the slowdown in activity following expiration of the home buyer tax credit. This continued low level has led to a deficit in the single-family homes that will be needed to meet what is a growing pent-up demand for housing as the economy improves. Courtesy of Sprinkle Construction LLC

The economy is somewhat stronger, but by no means robust, as third quarter GDP growth and October non-farm payroll employment rose after four months of decline. However, there was still enough weakness for the Federal Reserve to announce a second round of long-term asset purchases aimed at boosting the economy.

Inflation as measured by both the Consumer Price Index (CPI) and Producer Price Index (PPI) remained subdued despite upward pressure from higher energy prices. Home builders are feeling pressure from higher building materials costs.

Housing continues to struggle. Housing starts fell in October mainly due to volatile multifamily starts. Single-family starts and building permits were essentially flat, indicating that housing is in a holding pattern. One small positive sign was an uptick in the November NAHB/Wells Fargo Housing Market Index (HMI) from 15 to 16.

Housing needs to help the economy recover, but it could be years before it makes a positive impact on the landscape industry.

Pending home sales were down in September and the homeownership rate continued on a downward trajectory in the third quarter. The latter may have contributed to a decline in the rental vacancy rate, which remains relatively high.

- Courtesy of NAHB