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Charlotte-area new home construction, while still weak, appears to be showing signs of life and in some cases out-performed national results heralded Friday as the best in months.
Mecklenburg County building permits for single-family homes rose 9 percent in June, compared with May. That exceeded the national increase of 6 percent released Friday by the Department of Commerce.
Compared with a year ago, Mecklenburg single-family permits were down 31 percent in June. While still a steep decline, that was the smallest drop in almost two years. And it was only slightly below the comparable national drop of 29 percent.
Area subcontractors and suppliers say the worst seems to have passed, and they're hopeful a slow climb back has started. Construction employment losses also have slowed, with some locals saying they've done a little hiring.
“It looks like things are starting to rebound a little bit,” said Skip Norris, president of The Building Center, with lumber yards serving mostly builders, from Statesville to Columbia. “Our revenues are no longer trending down.”
To be sure, Mecklenburg's 189 single-family permits in June were a far cry from nearly 800 in June 2006, the county's peak year. June's decline is a notable improvement from drops that hit 70 percent during the winter, according to Observer analysis of county figures.
For the eight-county region, information is available only on a quarterly basis. For the second quarter, area single-family permits were down 50 percent compared with a year ago, according to Newton Graham Consultants. That's better than the first quarter's 63 percent drop, based on permit data compiled by Market Opportunity Research Opportunities.
The increases nationally beat economists' expectations and are “hinting that a bottom may finally have been reached for residential construction,” Wells Fargo senior economist Mark Vitner wrote in a report Friday. However, he added “we do not expect to see strength return to the housing market anytime soon.”
Vitner expects housing starts “will likely slowly grind higher over the next several quarters.”
“The permits have been staying pretty consistent for the last three, four, five months, but it's still a lot slower than two, three years ago,” said Brandon Nicholls, operations manager for Fireside Hearth & Home of Charlotte, which operates throughout the area. “I do believe it's bottomed out.”
In the Charlotte area and nationwide, high-end building remains nearly dormant. Most of what's selling is in modest price ranges, driven largely by a hefty tax credit for first-time homebuyers. Builders are hustling to get houses ready before the credit's Nov. 30 deadline. There are concerns about what happens to sales then, as foreclosures, job losses and wage cuts continue weighing on home sales. That's certain to make recovery a bumpy ride.
Nita Hunt, owner of Falapco, a Concord plumbing firm, said this is the worst downturn she's seen in 21 years in the industry. Business had improved a little for several months, but the last two weeks have slowed again.
“It's hard to have any business plan,” she said.
Mark McGarity, vice president of Charlotte Lanehart Electric in Fort Mill, said he's hired about eight people in the past six weeks. Those four crews bring him to a total of 10, an improvement but still sharply off the 70 crews he had during the boom. The company works mainly in new home construction, from around Fort Mill up to Statesville.
“There is a little uptick,” McGarity said. “Some builders have got a fairly positive outlook.”
Housing is a key employment driver. Experts estimate that building 100 single-family houses puts 284 people to work, including carpenters, bankers and furniture sales people.
Construction has been among the big employment losers during a deep recession brought on by the housing bust. Locally, numbers are hard to track because overall construction is combined with mining and logging in federal figures. However, one construction category saw job losses stop in May, the most recent figures. Another showed a small increase.
Matt Walker, who owns Caryl Electrical II in Matthews and Caryl Mechanicals II in Monroe, said he's hired a few people recently. He has about 65 employees between the two companies and works mainly with builders in Mecklenburg and Union counties.
“I'm seeing a little bit of a positive attitude with the builders,” he said.
Norris, at The Building Center based in Pineville, said March was the pits, capping a plunge that started in October. He has more than halved his work force, from about 330 in September 2007 to 145 now. But he's heartened to see that so far this month, sales are up about 15 percent compared with June.
“We're fortunate to be in this market and not some others that are suffering a lot worse,” he said. “We seem to have at least bottomed out.”
