Residential Market is Off to the Races in 2021
At the midway point of the first quarter of 2021, residential market building activity should continue enjoying an upward trend that began several years ago.
The December 17th, 2020 U.S. Census Bureau report shows privately-owned housing starts in November increased 1.2% above the revised October estimate of 1,528,000 housing units. That is 12.8% above the November 2019 rate.
Furthermore, according to a recent CNBC report (ncilink.com/CNBCHousing), ‘The housing market has been a bright spot in the economy despite 25.3 million people being on unemployment benefits.
‘Unemployment has disproportionately affected low-wage workers, who are typically young and renters.
‘According to data from mortgage finance agency Freddie Mac, the 30-year fixed mortgage rate is around an average of 2.81%,’ the report says.
‘Growth estimates for the July-September quarter are as high as a 35.2% annualized rate, which would recoup roughly two-thirds of the output lost because of the Covid-19 pandemic.’
More Good News
In a recent Forbes magazine article, office construction numbers are down. Forbes attributes that to the fact that the pandemic has forced so many to work from home. The magazine also says that is great news for the HVACR Industry.
‘As more people work from home, demand for home improvements ‘ including HVACR upgrades ‘ has soared due to the pandemic. IBISWorld (an international industry research firm founded in 1971) expects 1% average growth in this $47.6 billion (estimated 2020 revenue) industry through 2025,’ writes Forbes guest columnist Peter Cohen in an October 2020 article titled, 3 Ways to Invest in the Future of Air Conditioning (ncilink.com/ForbesHVACInvest).
Cohen interviewed executives from several key HVAC manufacturing companies. In his interview with Chris Nelson, president of Carrier HVAC, he quotes Nelson saying the Pandemic shined a spotlight on the importance of indoor air quality and put it ‘center-stage.’
Nelson told Forbes this bodes well for the HVAC Industry, which was modestly hurt by the shutdowns. He is quoted as saying the HVAC Industry will likely benefit from future growth in IAQ and home renovations.
Replacement Market Remains Key Growth Driver
All is not about the impact of COVID-19. The HVAC Industry has enjoyed continuous growth in the replacement sector. This is due to aging mechanical system equipment in residential and commercial markets for decades. Today, advances in technology, connectivity, low or no-interest financing options, and other factors play well for contractors and consumers when it comes to replacing existing equipment that has reached the end of its operational lifespan.
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