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Home Sales, Construction Lagging Behind Economic Recovery
August 14, 2018
Despite an overall robust economic recovery, housing is still a step behind. “The disconnect between a strengthening economy and struggling housing sector has been a common theme throughout this expansion and, unfortunately, is a theme that is likely to continue,” according to a recent Wells Fargo Securities report.
Through the first half of the year, existing home sales are about 2% off last year’s pace during the same six months. The lack of homes for sale in 2018 is one of the main reasons for this difference compared to 2017. Existing home sale inventory increased slightly in June, but had declined for the previous 36 months on a year-over-year basis.
Meanwhile, new home sales have been hurt by rising lumber costs as well as other building materials price increases. According to the latest IHS Markit PEG Engineering and Construction Cost Index, the materials/equipment subindex for current pricing showed rising prices for the 20th consecutive month in July. This leads to leaner new home sale inventory and, in turn, higher home prices.
According to Wells Fargo, existing home sales and new home construction are expected to rise less than previously predicted, with existing home sales forecasted to drop more than a percent this year. It is expected new home construction will improve later this year, as building material prices start to ease.
-Michael Miller, managing editor
Nonresidential Spending Predicted to Grow in 2019
August 10, 2018
Nonresidential construction spending is expected to take a step back in 2019 compared to 2018; however, overall nonresidential building is still predicted to grow. At the start of the year, economists from different firms polled by The American Institute of Architects (AIA), said views have changed for the better, according to the recently released consensus forecast from AIA.
“At the halfway point of the year, this panel is even more optimistic,” said AIA Chief Economist Kermit Baker, Hon. AIA, Ph.D. in the release. Overall nonresidential building was predicted to have a 4.7% growth in 2018 and a 4% growth in 2019. At the beginning of the year, it was projected that nonresidential spending would increase 4% this year and slightly under that next year.
Commercial/industrial is expected to have a large drop-off next year, coming in at 3.4% growth compared to nearly 7% this year. However, industrial growth is forecasted to increase 5% year-over-year. Meanwhile, the institutional sector is expected to remain the same at 4.5% growth. Public safety is forecasted to see a large drop in growth as well from 10.9% to 5.9%.
“If these projections materialize, by the end of next year the industry will have seen nine years of consecutive growth, and total spending on nonresidential buildings will be 5% greater—ignoring inflationary adjustments—than the last market peak of 2008,” added Baker.
-Michael Miller, managing editor
Construction CEOs Still Slow to Embrace Technology
August 8, 2018
A recent survey of CEOs by organization Vistage indicates many construction executives do not plan on expanding the use of technology in their companies. About half of the respondents do not plan on technology impacting their work in the next 12 months, citing the use of blockchain, artificial intelligence, connected devices and intelligent digital assistants.
Most of these feelings toward technology come from CEOs remaining optimistic about future jobs and the hiring of future employees. The respondents of the report also expressed confidence in the current economy, expecting it to remain healthy.
As a whole, the commercial construction industry has remained slow to adopt technological advances. The results of this survey continue to reflect this notion, coupled with the fact that construction labor and trade work continues to be unpopular with younger generations entering the workforce.
The use of technology on the job has proven to speed up the building process and save CEOs money, however this also does cut down on the number of hires and employees moving forward.
—Christie Citranglo, editorial associate