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Housing slowdown ripples hit other areas
Suppliers of housing components could struggle, but some have been helped by the commercial market.
Saturday, October 07, 2006
DAYTON — Home builders are cutting back plans for new projects. Deliveries of materials for housing construction have slowed. Inventories of unsold houses have increased.
That means reduced demand for an array of products and materials — from doors and windows to roofing, lumber and turf.
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"The job news in Dayton is not good, and that affects consumer confidence," said Tom Lofquist, Dayton division president for Drees Homes. "We're starting to see developments, new communities, be tabled. Definitely, they're slowing down in the numbers of those being contemplated."
Drees Homes typically starts building 80 to 100 homes in a year, but that will likely be down by 20 percent this year, Lofquist said. Drees recently laid off one employee and didn't replace another who left its 30-person local work force, and Lofquist said he has heard about layoffs by some other builders in their construction and administrative staffs.
Builders are trying to stoke sales by offering reduced prices and bigger incentives, he said.
Nationally, there is a record backlog of 530,000 unsold new single-family housing units, and the volume of existing housing units for sale is six times that number, also a record, said Richard DeKaser, chief economist for National City Corp., the company that owns National City Bank.
"To be sure, we're seeing a drag on the economy," he said.
The prior 10 to 15 years were good ones for home builders, as lower interest rates spurred construction and sales. But interest rates have gone up, and job cutbacks by some major regional employers have dampened the demand for new housing.
Fortunately, a surge of commercial construction — offices, industrial and retail properties — in recent months has helped to employ some of the workers affected by the slowdown in housing.
Ray Zawadzki, owner of United Building Materials, said that although his shipments of materials for housing construction have slipped, he has had a business boom supplying construction materials for Middletown Regional Hospital, Clinton Memorial Hospital in Wilmington and St. Rita Hospital in Lima. Zawadzki's Dayton-area sales are typically $10 million annually, but he said he expects that will be up 10 percent this year because of the commercial construction demand.
Contact this reporter at (937) 225-2242 or
jnolan@DaytonDailyNews.com.
Housing slowdown around U.S.
The slowdown in the housing industry has taken hold in the Miami Valley and elsewhere around the country. Richard DeKaser, chief economist for National City Corp., projects that it might not end until late 2007 or early 2008, because it will take time to recover from the dampening effect of rising interest rates and higher home prices.
"There's two ways you fix that, and that's that either home prices fall or incomes rise, and neither of those happen very quickly," DeKaser said.
