Sales volumes at building material dealers in the mid-South averaged 32% lower in the third quarter of this year than in the same period of 2008, a new Southern Building Material Association (SBMA) survey indicated today. Despite that downturn, at least half the dealers managed to keep profit margins at or above last year's levels.

Results of the SBMA poll of 70 dealers based in Virginia, Tennessee, and the Carolinas were reported the same day that the National Association of Home Builders (NAHB) said builder confidence nationwide for newly built, single-family homes slipped one point in October to reach 18 on a 100-point scale. And the Obama administration, identifying three barriers holding back the volume home retrofits, said it will institute several steps designed to boost the pace.

Ninety-two percent of the dealers responding to the SBMA poll said sales declined in the third quarter from the July-September 2008 period; just 4% reported a sales increase, and the rest said sales were unchanged. But 38% of the dealers said they had higher margins in the third quarter vs. the year earlier, 15% recorded the same margins and 47% said their margins were lower.

No more than 3% of the dealers thought sales would be excellent the rest of the year, while no more than 14% could even muster up an estimate that sales would be good. That could be in part because only 46% said they were seeing signs the housing downturn had bottomed out in their markets.

The NAHB's Housing Market Index, conducted jointly with Wells Fargo, reflected similar gloom, as--for the first time since November 2008--each of the HMI's three component indexes recorded declines in October. The component gauging current sales conditions fell one point to 17, while the component gauging sales expectations for the next six months declined two points to 27 and the component gauging traffic of prospective buyers fell three points to 14.

"On a regional basis, the Northeast was the only part of the country to record an improvement in its HMI score, with a one-point gain to 25," NAHB's said. "Meanwhile, the Midwest and South each recorded one-point declines to 18 and the West recorded a four-point decline to 14."

The Obama administration's report, Recovery Through Retrofit," was issued by Vice President Joe Biden's office. It said a self-sustaining market for retrofitting homes has yet to develop despite the economic and environmental benefits of improving home energy efficiency. As for why, the report identified three barriers:

  • "Consumers do not have access to straightforward and reliable information on home energy retrofits that they need to make informed decisions."
  • "The upfront costs of home retrofit projects are often beyond the average homeowner's budget."
  • "There are currently not enough skilled workers and green entrepreneurs to expand weatherization and efficiency retrofit programs on a national scale.

The report didn't call for spending more money on retrofit efforts than already were in the stimulus bill passed earlier this year or are in other parts of the federal budget. Rather, it said a combination of existing programs could help attack the problem. Those measures include:

  • Create an Energy Star label for existing homes--"an easily recognizable benchmark that energy auditors, retrofitters, lenders, realtors, and consumers can use to compare home energy performance and identify the most energy efficient homes."
  • Develop a national home energy performance measure.
  • Support municipal energy financing, in which the costs of retrofits could be added to a homeowner's property tax bills.
  • Expand the use of Energy Efficent Mortgages, which enable home buyers and homeowners refinancing their properties to add energy efficiency upgrades and improvements to their properties as part of the underlying mortgage financing transaction.
  • Expand state revolving loan funds, which currently exist in just 16 of the 50 states.
  • Establish national workforce certifications and training standards.
  • Create an "interagency Energy Retrofit Working Group" to lead the initiative.

"These recommendations can pave the way for a self-sustaining retrofit market, a market that can reliably cut energy bills while also creating good green jobs and saving consumers money," the report concluded.