Enterprise resource Planing
ERP for the Home Building Industry
A white paper
Godfried Augenbroe
College of Architecture, Georgia Institute of Technology
Summer 2006
This is the first of two white papers that review the current use and future potential of ERP systems in the home building industry.
The companion white paper, titled “ERP for supply chain management in the home building sector” focuses on the supply and value chain in residential construction.
ERP for the Home Building Industry
© Georgia Institute of Technology; Summer 2006
1
THE ECONOMICS OF THE RESIDENTIAL CONSTRUCTION MARKET IN
THE US
Over the last decade, the economic and financial market environment has been good for the construction sector as a whole and especially for the housing sector. Mainly due to record low mortgage rates, the interest-sensitive housing sector has remained the hottest part of the U.S. economy. Low interest levels, combined with creative financing options have resulted in home affordability for US families at levels seen last in the early 90s.
Record levels of both new and existing home sales and forecasted housing starts of more than 2 million units in 2005 further exemplifies this. The numbers for 2005 regarding house sales, new starts and construction activity overall, surpassed the 2004 single-family records (source: www.housingeconomics.com). NAHB’s housing market index edged up to 70 in the spring of 2005. This was near its all time high where it had been steady for more than a year. Furthermore, the index of applications for mortgages to buy homes
(source: Mortgage Bankers Association series) moved up to a record level by late spring
2005. Sales of new single-family homes jumped an unexpected 13.0% to a record seasonally adjusted annual rate of 1.424 million units in October 2005 , the U.S.
Commerce Department reported, up 9% from a year earlier. NAHB’s multifamily
(condos and apartment complexes) and remodeling market indexes stayed strong as well
all
A white paper
Godfried Augenbroe
College of Architecture, Georgia Institute of Technology
Summer 2006
This is the first of two white papers that review the current use and future potential of ERP systems in the home building industry.
The companion white paper, titled “ERP for supply chain management in the home building sector” focuses on the supply and value chain in residential construction.
ERP for the Home Building Industry
© Georgia Institute of Technology; Summer 2006
1
THE ECONOMICS OF THE RESIDENTIAL CONSTRUCTION MARKET IN
THE US
Over the last decade, the economic and financial market environment has been good for the construction sector as a whole and especially for the housing sector. Mainly due to record low mortgage rates, the interest-sensitive housing sector has remained the hottest part of the U.S. economy. Low interest levels, combined with creative financing options have resulted in home affordability for US families at levels seen last in the early 90s.
Record levels of both new and existing home sales and forecasted housing starts of more than 2 million units in 2005 further exemplifies this. The numbers for 2005 regarding house sales, new starts and construction activity overall, surpassed the 2004 single-family records (source: www.housingeconomics.com). NAHB’s housing market index edged up to 70 in the spring of 2005. This was near its all time high where it had been steady for more than a year. Furthermore, the index of applications for mortgages to buy homes
(source: Mortgage Bankers Association series) moved up to a record level by late spring
2005. Sales of new single-family homes jumped an unexpected 13.0% to a record seasonally adjusted annual rate of 1.424 million units in October 2005 , the U.S.
Commerce Department reported, up 9% from a year earlier. NAHB’s multifamily
(condos and apartment complexes) and remodeling market indexes stayed strong as well
all