Impact on Building Materials Demand · IMPACT ON BUILDING MATERIALS DEMAND Single Family • Single family permits grew in every region from 2015 to 2016 • Largest increase occurred

HOUSING PERMITS 2016Impact on Building Materials Demand

Housing permits are just one input of the multiple variables monitored within Principia’s residential BuilderSeriesSM data products. Principia compiles data from the U.S. Census Bureau throughout the year to stay abreast of industry trends, identify shifts in the market and update our BuilderSeriesSM tools. Combined with multiple other data streams including direct voice of the customer insights Principia provides accurate geographic demand for building materials down to the zip code level. The 2016 housing permits update covered five observations impacting building materials demand:

• Total permits decreased on a national level from 2015 to 2016• Recent permit demand has been concentrated in the Southeast and West Coast• Multifamily units declined at a faster rate than single family units• Several states experienced the largest growth and decline in both single and multifamily sectors• Several counties consistently rank highly in both total permits and year-over-year growth

Contact the Principia team at [email protected] to learn more about evaluating materials demand and the impact on your revenue.

HOUSING PERMITSIMPACT ON BUILDING MATERIALS DEMAND

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Permits Growth by State - National

INSIGHT• National year-over-year permits decline was 0.096% • New York led the greatest decrease at 56% followed by North Dakota at 38%• Nevada had the greatest increase at 27%• Southeast and West regions continued to experience growth

2

Total Permits by Region and Unit Type

INSIGHT• Total permitted units dropped slightly from 1.182 million in 2015 to 1.180 million in 2016• West region lead in growth with 28,315 total unit growth or 25.83% of the national total, compared with 23.42% in

2015• Southeast similarly retained share, with 32.78% of the total national permits in 2016 compared to 30.75% in

2015


3

Permits Growth by Region and Unit Type


INSIGHT• Multifamily units decreased by 49% from 2015 to 2016 in the Northeast, while single family only increased

by 3% leading to an overall decline in the region• West and Midwest were the only regions to see growth in both single family and multifamily permits• West region had the largest overall growth in both single family and multifamily permits at 11% and 9% respectively

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Single Family

• Single family permits grew in every region from 2015 to 2016

• Largest increase occurred in the Southeast, with units increasing fom 245,153 in 2015 to 270,992 in 2016 Multifamily

• Multifamily unit construction grew consistently from 2010 to 2015 with the first drop in 2016

• In 2016 there was significant decline in the Northeast region, however the permit values are still larger than in 2013

• Multifamily permits grew in the West and Midwest from 2015 to 2016

Permit Units by Region and Year

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Single Family

Multifamily


INSIGHT• Steady growth in single family units across the United States of 17% from 2015 to 2016, with the exception of the

Central Plains that experienced a decrease in single family units• Idaho and Utah had the largest increase in single family permits with 25% and 21% respectively• North Dakota experienced the largest decrease in single family permits at 31%• In general, multifamily permits decreased across the United States at a total of 2%• Significant growth of multifamily permits in the Southwest with the largest increase in Nevada at 80%• Northeast saw a decrease across the board in multifamily units except for Rhode Island that had an 88% increase

Permits Growth by State and Unit Type

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Single Family Multifamily


INSIGHT

• Clusters of counties within the Plains had some of the hardest hit counties including: Lancaster County, NE; Yellowstone County, MT; and Sedgewick County, KS

• Nevada, Arizona, Georgia, Tennessee and Kentucky stand out as states with more positive growth across counties

Permits Growth by County

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INSIGHT• Top counties permitted in 2016 include Maricopa County, Arizona with 25,746 permits followed by Harris

County, Texas at 22,661 permits and Los Angeles County, California at 20,032

2016 Permits Rank by County

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5 Observations for Sales Targeting in Building Materials

1. Overall total permits have leveled from 2015 to 2016 which indicates a slowing of new construction which is a major indicator for building materials demand

2. Declining permits growth in multifamily permits indicates a possible slowing in building materials demand specifically for commercial materials in the Northeast

3. Manufacturers and distributors of building materials used in new single family construction will likely benefit from pursuing opportunities in the higher growth Southeast and West Coast regions

4. Identifying the markets where permits growth has stagnated or started to decline will be crucial for future growth projections and resource allocations

5. Florida and California continue to show signs of growth in many counties based on high total permits and year-over-year growth

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Housing permits data is one key variable to weigh when considering where and how to allocate sales resources to meet market demand. Principia has identified five market observations related to permits activity that have influenced or will impact demand for building materials in 2017 including:

Principia’s BuilderSeriesSM is a suite of three, innovative, online data tools that delivers a 360-degree view of supply and demand in all major residential building product categories. Learn more about these resources and how they can support strategic and tactical decision-making initiatives by visiting our website at principiaconsulting.com.

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Principia is a leading research and consulting firm focused exclusively on the building materials and construction industry. For over 20 years, senior executives have trusted Principia for information, analytics and insights essential for better decision-making, faster growth, and greater profitability.

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Impact on Building Materials Demand · IMPACT ON BUILDING MATERIALS DEMAND Single Family • Single family permits grew in every region from 2015 to 2016 • Largest increase occurred