Housing Starts Peak Again In February, Internet a Significant Home-Buying Resource

The National Association of Home Builders (NHAB) reports that single-family housing starts set a new all-time record and multifamily construction was buoyed by the condominium market. Total housing starts increased by 0.5 percent to a seasonally adjusted annual rate of 2.195 million units, setting a new 21-year-record for the second month in a row, the U.S. Commerce Department reported earlier this month. The February construction pace was also 15.8 percent above a year ago.
 
“Builders are reporting that there is still plenty of traffic in their sales offices,” said Dave Wilson, NHAB president and a custom home builder from Ketchum, Idaho. “Mortgage rates, employment, household income and other favorable market conditions continue to drive demand.”

NAHB Chief Economist David Seiders agreed. “Homeownership continues to plow ahead,” he said. “Builders are reacting to strong demand in the single-family home and condominium markets, both of which continue to cry out for supply. Stronger job prospects also are fueling the rental market.”
 
The rate of single-family home construction reached 1.775 million units, a new record for the second month in a row. The pace was 0.3 percent above the January rate and 16.7 percent above February 2004. Multifamily housing starts increased to a seasonally adjusted rate of 420,000 units in February, 1.7 percent above the January pace and 12.3 percent above a year earlier. Issuance of total building permits decreased 2.7 percent from January’s robust pace to a seasonably adjusted rate of 2.074 million units.

“It’s perfectly clear that housing will remain an important component of GDP for the first quarter of the year. There’s no question that the housing market is still an engine of economic growth,” Seiders said. “However, we do expect housing to plateau as the year progresses, other components of the economy pick up more steam and the interest rate structure moves up further.”
 
Along with new homes often comes new landscaping, which is why the green industry is wise to keep an eye on housing starts and consumer confidence. Another detail lawn and landscape contractors should consider is where new homebuyers get their information. A recent study by the California Association of Realtors (CAR) shows that nearly two-thirds of all first-time home buyers used the Internet as a significant part of the home-buying process. Chances are, they may be looking for lawn care, landscaping, irrigation and other service companies on the Web as well.

The 2005 Internet Versus Traditional Buyers Survey released on Tuesday showed that 62 percent of homebuyers used the Internet as a integral part of the home-buying process, compared to 56 percent in 2004. The report notes that Internet buyers and traditional buyers should not be viewed as two separate groups, but as segments in the spectrum of the home-buying population, each utilizing technology in varying degrees. However, some specific characteristics of Internet buyers were identified in the survey. According to the report, Internet buyers were younger, wealthier, better educated and more likely to be married than traditional buyers.

“As more consumers gain access to high-speed connections and spend more time online, they have clearly experienced a growing comfort level with using the Internet in all facets of their day-to-day lives,” says CAR President Jim Hamilton.

Internet buyers and traditional buyers both expressed significant differences in how they conducted their home-buying research. Internet buyers conducted more research at the onset of their home-buying process, while traditional buyers relied more on their real estate agents as information sources. Other key findings included:

• The median age of Internet buyers was 39 years compared with a median of 46 years for traditional buyers. 
• More than nine out of 10 Internet buyers were married, while eight of 10 traditional buyers were married.
• Eighty-five percent of Internet buyers had at least a four-year college degree and 11 percent completed post-graduate work. By comparison, 78 percent of traditional buyers held a college degree and 4 percent completed post-graduate work. 
• Internet buyers had an annual income of $185,088, compared with $151,190 for traditional buyers.
• Internet buyers spent two weeks looking for the home they ultimately purchased, compared with seven weeks for traditional buyers.
• Close to six of 10 Internet buyers said the information that they gathered from the Internet was less useful than that provided by their Realtors; none considered the information gathered from the Internet to be more useful than that obtained from their Realtors.