Here's the overview line in the Federal Reserve's "Beige Book," released last week, that sums up Fed economists' take on current housing dynamics.
Construction and real estate activity generally expanded in late February and March, and contacts across Districts maintained a positive outlook for the rest of the year. Residential real estate activity strengthened, on balance, with robust growth in San Francisco, Cleveland, and Boston, but more mixed reports from Dallas, Kansas City, and Atlanta.
Further into the report, zeroing in on what Fed Bank of Cleveland researchers observe about the U.S.'s Fourth District, it says:
Year-to-date sales through February of new and existing single-family homes increased 10 percent compared to those of a year earlier. The average sales price increased by more than 3 percent. Several builders and real estate agents attributed robust sales to low interest rates and continued pent-up demand. A few commented that recent financial market volatility had negatively impacted consumer confidence and may have dampened new-home sales. Estimates of single-family construction starts rose moderately over the period. New-home contracts remain concentrated in the move-up and high-end price point categories. New-home prices increased over the period, a circumstance which builders attributed to rising labor (including subcontractor) and material costs. Homebuilders and real estate agents expect further improvement in housing market conditions in the upcoming months.
There it all is, in a nutshell. Growth. Pricing. Demand drivers. Demand retardants. Activity. Segmentation. Labor constraints. Expectations.
Expectations--despite both known headwinds and the suspicion that unknown dislocations lurk offstage of the market spotlight--are for an up year from an up year, which also was an up year from a barely up year.
Pent-up--which is always more appropriately used to express the release of some force, rather than an explanation for the absence of that force's effects--demand suggests a housing market still capable of "taking on a life of its own," and becoming its own set of causes and effects, like an autonomous vehicle. Wall Street Journal staffer Justin Lahart asserts that a strong jobs track record and low, low interest rates support a constructive view of housing around the next corner.
These broad cyclical notions tend to hurt my head, though. That's all so far removed from the job sites, which is where the magic really happens. Think about all of the hard, hard work that goes into making a home so good that it winds up not being about selling that home at all. Instead, it winds up a) as an outcome reflecting the collective effort of scores of people fearless and ferocious in their focus on being the best, and b) as a homeownership experience that is smarter, better, and happier.
Home builders build houses and communities. The business their in, though, is improving the lives of new homeowners. When home buyer customers' lives get better, home builders--their team of associates, vendors and partners of all stripes--win. Home builders and their teams are rainmakers, not just in the sense of being pros at selling. They're sophisticated specialists at lowering their customers barriers and levels of difficulty from becoming what they want to become in their new homes. And they're experts in raising their customers' sense of themselves to a new, higher level altogether.