Copper tube maker sees housing market pickup before year’s end

By Tom Stundza -- Purchasing, 4/23/2008 9:20:00 AM

A major supplier of copper tube and fittings for housing believes that the contraction of the residential construction market is close to the bottom “and will soon commence a gradual, but perhaps fitful, improvement” that will boost shipments by plumbing and refrigeration tube makers such as Mueller Industries of the Memphis, Tenn.

Harvey L. Karp, chairman, says in a filing with the government that “housing starts have already declined almost 60% over the past 2 1/2 years (but) mortgage rates remain at historically low levels and will provide an incentive for buyers to return to the housing market” sometime in the second half. Karp’s comments mirror the latest commentary by the chief economist of the National Association of Home Builders.

Meanwhile, sales of existing homes fell in March as a severe slump in housing showed no signs of abating. The National Association of Realtors reports that sales of existing single-family homes and condominiums dropped by 2% in March to a seasonally adjusted annual rate of 4.93 million units, a 2% decrease from February's annual pace of 5.03 million.

At the same time, the National Association of Home Builders says total housing starts fell to a 17-year low of 947,000, seasonally adjusted, in March 2008, representing a decline of 11.9% from the previous month. Both the single and multifamily sectors contributed to the overall contraction; atop that, building permits fell 5.8% in March to a 927,000 unit pace.

David F. Seiders writes that “NAHB’s current housing forecast shows major declines in home sales and housing production for 2008 as a whole, although we’re showing turning points for sales and starts before the end of the year. However, Seiders also points out that the NAHB’s monthly surveys of single-family builders “have yet to provide convincing signals regarding near-term stabilization of buyer demand or housing production. Traffic of prospective buyers has revived to some degree since late last year but the quality of traffic apparently is not high. Furthermore, gross and net home sales still are eroding and sales expectations of builders remain in the doldrums.”