Tenon upbeat as US housing gains momentumFriday 31 May 2013 New Zealand based wood products manufacturer and distributor, Tenon, confirmed in an announcement to the New Zealand Stock Exchange this week that it expected a significant turnaround in earnings as the US housing recovery gains further momentum.US building permits in April exceeded 1 million new homes, the highest level recorded since June 2008, signalling a much stronger level of new building activity than the fewer than 500,000 houses built at the cycle low. Over the past 12 months US home prices have, on average, increased 11% (the largest annual gain recorded since April 2006), and the National Association of Realtors predicts further rises of 13% cumulatively in calendars 2013 and 2014. If such further increases were to occur, they would imply an increase of over US$2 trillion in US household wealth, giving further confidence to homeowners to spend on home improvement activities. It is the remodelling segment in the US housing market that drives Tenon’s large home centre store sales. Harvard’s Housing Studies Leading Indicator of Remodelling Activity (LIRA) projects much higher activity level in US remodelling in the second half of the current calendar year. This projected is also supported by the strong rise in house prices recorded over the past year. US home prices have now recovered to the level they were at in 2007, and more than US$1.6 trillion has been added to homeowners’ equity over the past 12 months.
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