What We’re Reading

New Home Sales Rise 3.5 Percent in August Even as Affordability Concerns Persist1

National Association of Home Builders   9/26/2018

"Sales of newly built, single-family homes rose 3.5 percent in August to a seasonally adjusted annual rate of 629,000 units after downwardly revised June and July reports, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. These downward revisions suggest softness in new home sales activity this summer. However, on a year-to-date basis, sales are up 6.9 percent from this time in 2017.

New home sales have ticked up in August, due to positive demographics and a strong overall economy,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La. “However, housing affordability remains a serious concern and builders must manage supply-side costs and stiff regulatory hurdles to keep prices competitive.”"

 Read the full article here.

Dodge Momentum Index Falters in August2

Dodge   9/10/2018

"The Dodge Momentum Index fell 2.9% in August to 164.1 (2000=100) from the revised July reading of 169.0.  The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.  Pushing the Momentum Index lower in August was its commercial component, which dropped 6.1% from July."

Read the full article here.

Builder Confidence Remains Firm in September1

National Association of Home Builders   9/18/2018

"Builder confidence in the market for newly-built single-family homes remained unchanged at a solid 67 reading in September on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

“Despite rising affordability concerns, builders continue to report firm demand for housing, especially as millennials and other newcomers enter the market,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, La. “The recent decline in lumber prices from record-high levels earlier this summer is also welcome relief, although builders still need to manage construction costs to keep homes competitively priced.”"

Read the full article here.

ABC’s Construction Backlog Indicator Hits a New High in Second Quarter of 20183

Associated Builders and Contractors   9/17/2018

"Associated Builders and Contractors reports that its Construction Backlog Indicator expanded to a record 9.9 months during the second quarter of 2018. Backlog is up 12.2 percent from the first quarter and 14 percent compared to the same time last year.

“Construction backlog has never been higher in the history of this series,” said ABC Chief Economist Anirban Basu. “While contractors collectively reported a higher backlog, it was the industrial contractor segment that had the largest increase in the second quarter.”"

Read the full article here.

Contractors Remain Upbeat in Q24

Building Design & Construction   9/25/2018

"Construction contractors remained confident during the second quarter of 2018, according to the latest Construction Confidence Index released today by Associated Builders and Contractors.

More than three in four construction firms expect that sales will continue to rise over the next six months, while three in five expect higher profit margins. More than seven in 10 expect to bolster staffing levels, though that proportion has fallen relative to the previous quarter, perhaps in part due to the skilled labor shortage in the United States. All three key components measured by the survey—sales, profit margins, and staffing levels—remain well above the diffusion index threshold of 50, signaling ongoing expansion in construction activity."

Read the full article here.

Public Markets5

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*Calculated as (EBITDA – Capex) / EBITDA

Public Comparables5

Building Products & Services

As of September 30, 2018

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Building Products Distributors

As of September 30, 2018

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Construction Materials

As of September 30, 2018

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Relevant Transactions5

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Representative Building Products & Materials Transactions

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1. NAHB

2. Dodge

3. Associated Builders and Contractors

4. Building Design & Construction

5. FactSet

 

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