The residential homebuilding market has also been the bellwether of the entire construction industry. This miner’s canary, which has lain barely breathing for more than three years, has started to chirp again.

I thought of this a few weeks ago, while watching a presentation at the HSG Summit in Florida by Alan Beaulieu, an economist with ITR Economics. Alan and his brother, Brian, are both economists and many years ago, Brian came up with an algorithm that he used to predict changes in the economy.  He proceeded to show a series of graphs with his modeling followed by what actually happened. By golly, he was right. Alan said that in all their years of tracking, they  had never been wrong.

So that got me to thinking about the truisms to which I subscribe—the algorithms in which I believe, if you will. They are not nearly as deep or complex as ITR’s but they have held true in all my 30+ years of following the glass industry. They are:

1. Residential construction will be the first to show the effects of any changes in the economy;
2. Retail glazing will be the next; and
3. Contract glazing will be the last; it is the last to drop and the last to come back.

Those three rules have held true through every grind, up or down, of the economy that I have seen since 1981.

So it is especially hopeful to see signs that the residential housing market is starting to return. Brian talked about this in his speech in Florida. And the nation’s largest homebuilder by market value, Pulte, had profits of $206 million on sales of $2.3 billion last year. Its major competitors, including Toll Brothers and Lennar, were profitable as well.  Resale prices are also rising, fueled by low interest rates and an ever-decreasing inventory. It seems life has returned to home building. (Click on the following link for the latest optimistic housing stats: newhousingstarts)

So if what I have seen over and over again in the past holds true, retail glazing should  be starting back up and the contract glazing market, which stabilized third-quarter last year, should grow next year.  And that would make for a nice Spring-forward indeed.

Have a great week,
Deb

 P.S. Hope to see you at Glass Expo Northeast ’13 later this week. We are looking forward to a great event.