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Housing Starts down but There’s Still Reason for Optimism

 

Recent economic news may have tempered the optimism for the housing construction industry. Even though the consensus among industry insiders is that more housing inventory needs to be built to meet current demand, other economic factors such as the raising of interest rates by the Federal Reserve and global market instability may have builders exercising caution.

The Commerce Department indicated that, when compared to December, housing starts in January were down 3.8 percent to a seasonally adjusted annual rate of 1.099 million units. Housing permits were also down a slight 0.2 percent.

That news wasn’t a surprise to the National Association of Home Builders. The organization recently reported that single-family home builders’ confidence fell three points to 58 in February from a January reading of 61 on its NAHB/ Wells Fargo Housing Market Index.

Though interest rates and global economic indicators may have played a role in that dip in confidence, the NAHB noted a few other factors also contributed, but that the organization remained optimistic about overall growth potential.

“Privately owned housing completions were up 2 percent in January.”

“Though builders report the dip in confidence this month is partly attributable to the high cost and lack of availability of lots and labor, they are still positive about the housing market,” NAHB Chairman Ed Brady said. “Of note, they expressed optimism that sales will pick up in the coming months.”

On a more positive note, the Commerce Department reported that privately owned housing completions were up 2 percent in January to a seasonally adjusted rate of 1.057 million units. What’s better is that this figure is up 8.4 percent when compared to January 2015, according to an article from Brena Swanson at HousingWire.com

In Swanson’s article, Quicken Loans Vice President Bill Banfield said last month’s setback in housing starts may have only been temporary.

“Taking a step back to look at year-over-year growth, we continue to see healthy and steady gains,” Banfield said. “It should be noted that near record low mortgage rates and increased credit availability should give a boost to potential homebuyers as we move through the winter months.”

Other Areas of Growth
While housing construction has taken a step back this month, other areas of the construction industry are looking up.

Dodge Data & Analytics, a firm that analyzes construction data in North America, reported that its Dodge Momentum Index rose 2.4 percent in January to a reading of 126.4 when compared to December (123.4).

The firm indicated that the index is “a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.”

Dodge reported the index rise in January was due to a 1.6 percent increase in commercial projects and a 3.3 percent increase in institutional projects. When compared to this time last year, the index is up 1.7 percent.

Dodge also indicated that in January, 10 projects entered the planning process with a value of at least $100 million. The leading projects included a convention center/hotel in San Diego estimated at $270 million and a renovation/addition at an Agriculture Department facility estimated at $160 million.

Green Construction Projects
In another report, Dodge indicated that construction companies around the U.S. will become more involved in projects that are friendlier to the environment. The movement for more green construction is global, and the U.S. is one of the leaders in the number of firms expected to build new projects centered on environmentally responsible techniques and renovations of existing buildings.

Respondents in Dodge’s “World Green Building Trends Study” indicated that the percentage of builders that expected to have at least 60 percent of their projects involve green constructions would grow from 24 percent in 2015 to 39 percent in 2018.

The number of green projects is growing even more in other countries. Saudi Arabia is expected to see the percentage of green construction projects increase from 8 percent to 32 percent by 2018. China’s green construction percentage is expected to increase from 5 percent to 28 percent in that same time while Brazil’s is projected to go up from 6 percent to 36 percent.

The Importance of Adequate Storage During Construction
It doesn’t matter whether a construction project is renovating an existing building or constructing a new one; or whether it’s for housing, commercial or institutional purposes. If contractors want to stay on time and under budget, they need adequate storage on site.

Mobile Mini is an industry leader in providing secure storage containers for a variety of projects. Their solid steel construction features a patented locking system, so contractors know their tools, materials and equipment will be stored safely. Having storage on a job site also solves logistics issues and saves on transportation costs. Construction firms do not have to transport materials and equipment back and forth from the contractor’s headquarters each day. With Mobile Mini’s portable storage units, contractors can store whatever they need right on site so that operations stay as efficient as possible.

2017-12-27T12:08:55+00:00