The most reliable indicator of housing activity, by far, is NAHB’s builder sentiment index. When it’s up, starts rise; when it’s down, starts fall. And the steepness of the increases or decreases of the index and housing starts overlay almost precisely.
However, the index has two limitations: one, it doesn’t very precisely tell you how much (on a percentage basis) activity will move up or down; and, two, it just takes into account only builders’ points of view. What about, dealers, remodelers, and architects, not to mention that builders come in different shapes and sizes…for example, custom builders, multifamily builders and production builders.
Now Hanley Wood, publisher of BUILDER, comes to the rescue. The magazine recently conducted a survey, and 2,000 builders (of all shapes and sizes), dealers and, remodelers and architects responded. The survey gauged how much the respondents thought revenue from home building and remodeling would increase (or decrease) in 2014.
Turns out your peers are pretty optimistic. (See graph.) On average about 40% of all respondents expect revenue to increase by 10% or more next year (dealers are most optimistic, architects the least optimistic). Moreover only about 8% anticipate any kind of revenue decrease.
Now this doesn’t mean that you should put on your rose-colored glasses as you plan for and budget for 2014, but I think you should feel confident that there’s real upside in your business.
