Tag Archive for 'residential construction'

Page 2 of 5

Wells Fargo Reports:Housing starts fell unexpectedly in June to an 836,000-unit pace

 

Wells_Fargo_Securities_logoBy Mark Vitner, Senior Economist and Anika R. Kahn, Senior Economist

We suspect that rain was a key factor in recent weakness, which means that starts will be more impacted than permits. Indeed, single-family permits increased 0.6 percent, which is the third straight monthly gain. Another important point to make is that the level of permits is running ahead of starts, which suggests a ramp-up in activity is in the cards. Moreover, single-family units under construction show a more steady progression and have increased since the beginning of the year. Single-family units under construction are up 19.8 percent over the past year and increased 1.6 percent in June. Multifamily units under construction are up 38.2 percent on a year-ago basis, which also speak to continued strength in this sector.Housing starts fell 9.9 percent in June, with the decline concentrated in the multifamily component. On a regional basis, single-family starts fell in the South, where rain was likely a factor.

Housing starts fell unexpectedly in June to an 836,000-unit pace. While weakness was broad-based, much of the decline was in the volatile multifamily component, which fell 26.2 percent. Despite the monthly weakness, multifamily construction continues to be a boon for the economy, as renters shut out of the housing market due to tight lending standards continue to boost demand. In fact, multifamily starts are up 7.9 percent over the past year. Gains in apartment demand continue to be driven by the echo boomer generation and are expected to remain steady as many face extraordinary student loan debt. Moreover, the decline in multifamily appears to be a payback for the 28.2 percent jump in May. While the decline in multifamily in June is likely due to statistical noise, attention will be focused on the drop in single-family, which will raise questions whether the recovery remains sustainable.

Single-Family Decline is Much Ado About Nothing

Single-family starts fell 0.8 percent on the month, which is the third decline in four months. The decline seems to be at odds with recently reported builder sentiment. According to the Wells Fargo/ NAHB Builders’ Survey, builder confidence jumped 6 points in July, which is the third consecutive monthly increase. The increase brought the index to its highest level since January 2006. Builders are optimistic about present and future sales and buyer traffic continues to pick up. So, what is the disconnect in monthly data for sentiment versus starts?

Housing Outlook

We expect housing starts to increase to a sustainable pace of 990,000-units in 2013, with much of the gain in single-family. With single-family gaining solid footing, multifamily will begin to stabilize. We believe the trend in multifamily will continue, but starts should peak in the coming years. That said, real residential construction spending will continue to add to real GDP growth.10-Year Treasury Yield10-Year Treasury Yield10-Year Treasury Yield

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

ABC Reports: Construction Industry Unemployment Rate Falls To 10.8 Percent

CEU2“The hope is that this number, in conjunction with overall economic expansion, will ultimately produce a more sustained and more robust nonresidential construction recovery in the months ahead.” —ABC Chief Economist Anirban Basu.

Employment-June 2013Summary

With the summer building season underway, the nation’s construction industry added 7,000 jobs in May as the unemployment rate dipped to 10.8 percent, which is down from 13.2 percent in April and the lowest rate since October 2008, according to U.S. Labor Department. Since May 2012, the industry added 189,000 jobs, or 3.4 percent.

Despite gains in every other construction sector, the nonresidential building sector lost 2,600 jobs for the month. Year-over-year, the sector added 15,300 jobs, or 2.3 percent. Nonresidential specialty trade contractors added 1,200 jobs in May and netted 51,600 workers, or 2.5 percent, since the same time last year. Heavy and civil engineering employment rose by 3,100 jobs in May and increased by 28,600 jobs, or 3.3 percent, from May 2012.

In contrast, the residential sector added 900 jobs for the month and 18,100 jobs, or 3.2 percent, during the last year. Residential specialty trade contractors added 4,600 workers for the month and 76,300 workers, or 5.2 percent, on a year-over-year basis.

Overall, the nation added 175,000 jobs as the private sector expanded by 178,000 jobs and the public sector shrunk by 3,000 jobs. The national unemployment rate was 7.6 percent in May, up from 7.5 percent in April, but down from 8.2 percent compared to the same time last year.

Analysis

“Much of the growth in construction continues to be in residential building, as indicated in the addition of 76,300 residential specialty trade contractors during the past year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Last month, that sector added 4,600 jobs, representing nearly two-thirds of total construction growth.

“In contrast, other construction segments have not been rebounding nearly as rapidly,” added Basu. “Nonresidential building construction actually lost 2,600 jobs last month.

“Job growth has apparently been inadequate to foment robust nonresidential construction recovery,” Basu remarked. “This may be due to a number of factors, including still high vacancy rates in a number of different product categories.

“The mix of jobs has also likely played a major role, with many of the jobs added being temporary,” stated Basu. “Temporary workers are far less likely to induce new construction than the addition of permanent workers. The trend toward elevated temporary hiring is likely to continue over the next several months as many employers learn more about the implication of the Patient Protection and Affordable Care Act on their future health care costs.

“One bit of good news for the nonresidential construction segment was the addition of 3,100 jobs last month in heavy and civil engineering construction,” Basu said. “Healthy job performance in this segment is often considered a leading indicator for a number of other construction segments.

“The hope is that this number, in conjunction with overall economic expansion, will ultimately produce a more sustained and more robust nonresidential construction recovery in the months ahead,” Basu concluded.

To view the previous Employment report, click here

AGC Reports: Construction Unemployment Drops To 10.8 Percent, Lowest May Mark In Five Years As Industry Adds Jobs And Hours For The Month And Year-Over-Year 


AGCConstruction Employers Add 7,000 Jobs between April and May 2013, 189,000 since May 2012; More People Working in Construction since August 2009; Potential for Worker Shortages Grows, Officials Caution

Construction employment increased by 7,000 in May, helping to push the industry’s unemployment rate down to the lowest May level in five years, according to an analysis of new government data by the Associated General Contractors of America. Association officials said the relatively positive jobs report for the sector underscores the need to address potential shortages of skilled workers.

“Although the monthly job gain in May was modest, both residential and nonresidential construction have been adding workers at roughly double the rate of the overall economy in the past year,” said Ken Simonson, the association’s chief economist. “At the same time, formerly unemployed construction workers are finding jobs in other sectors, retiring or going back to school. These conditions may lead abruptly to worker shortages in parts of the industry, such as welders and pipefitters.”

Construction employment in May totaled 5,804,000, an increase of 189,000 or 3.4 percent over the past year. Aggregate weekly hours of all new and existing construction employees expanded by 5.2 percent from a year earlier. The unemployment rate for workers who last worked in construction dropped to 10.8 percent from 14.2 percent in May 2012, not seasonally adjusted, and the number of unemployed construction workers shrank over the year by 259,000 to 891,000. The latest numbers were the best May figures for each series since May 2008, Simonson noted.

Employment expanded in both residential and nonresidential construction in May, Simonson observed. Residential building and specialty trade contractors added 5,500 workers for the month and 94,400 (4.6 percent) over 12 months. Nonresidential building, specialty trade and heavy and civil engineering construction firms grew by 1,700 workers in May and 95,500 (3.7 percent) from a year earlier. In a positive indicator for future construction growth, architectural and engineering services employers added 2.1 percent to their workforces over the year.

Association officials said there was still time to avoid some of the future worker shortages that will come if the industry continues to add jobs over the coming months. They urged education officials to rebuild skills-based, or vocational, educational programs designed to help prepare students for careers in construction and manufacturing. And they urged Congress and the administration to reject the arbitrary caps on construction workers that are currently included in proposed immigration legislation.

“Just as contractors found ways to cope with the downturn, we need to make sure we are able to address the challenges that will come with the sector’s eventual recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the biggest challenges this industry faces is limited supply of skilled construction workers available to meet the kind of demand we all hope the industry will soon experience.”

Wells Fargo Reports: Housing Starts Plunge in April as Weather Holds Back Activity

Wells_Fargo_Securities_logoAfter a blowout report in March, starts plunged 16.5 percent in April, with both single- and multifamily starts tumbling. Permits rose sharply, however, and builders sound downright giddy about sales prospects.

 April’s 16.5 percent plunge in housing starts is less alarming when paired with the 14.3 percent rise in permits reported that month. Inclement weather likely delayed some starts, which should produce a nice rebound in May.

 

Starts Tumbled Back Below Permits

 After spiking in March, multifamily starts plunged 38.9 percent in April and were responsible for most of the swing in overall starts. Multifamily permits rose nearly 40 percent in April.

Single-Family Starts Dip, But Builders Sound Giddy

 Single-family starts fell 2.1 percent in April, marking the second consecutive monthly drop. Starts had been running ahead of permits, however, so the drop was not a surprise. Permits for single-family homes rose 3.0 percent to a 617,000-unit pace.

 Builder confidence improved in May and the tone of recent builder conferences has been downright giddy. Demand is improving but lots, labor and materials are in short supply.

Housing Starts Housing Starts and Building Permmits Well Fargo Single and Multi 

Wells Fargo Economics Group Reports: New Home Sales Rebound in November

Wells_Fargo_Securities_logoNew home sales rose in November to a 377,000-unit pace, which is the highest level since April 2010. Gains were concentrated in the Northeast and South. The median price is up 14.9 percent over the past year.

New Home Sales Activity Shows Solid Gain

· New home sales rose more than expected in November to a 377,000-unit pace, from a downwardly revised 361,000-unit pace in October. Sales activity rose in the Northeast and South but tumbled in the Midwest and West. The South, which accounts for just over half the nation’s new home sales, posted a 21.1 percent gain in November. Regarding the Northeast, the impact of Hurricane Sandy is still difficult to measure.

Lean Inventories and Rising Prices Give Hope

· Sales activity for new home purchases through November 2o12 are running 19.4 percent ahead of their year-ago pace. The continued upward trend in new home sales is being boosted by lean inventories and rising home prices, which continues to drive improving builder sentiment.

· The months’ supply fell in November to 4.7 months, from a revised 4.9 months in October.