July Construction Recedes Two Percent Overall but Building Numbers GrowAugust 22nd, 2013 by DWM Magazine
According to the latest construction starts numbers, released by McGraw Hill Construction, new construction starts in July decreased 2 percent to a seasonally adjusted annual rate of $479.1 billion, according to the report. Residential building in July showed further growth. For the first seven months of 2013, total construction starts on an unadjusted basis were reported at $281.7 billion, up 1 percent from the same period a year ago. The year-to-date amount for total construction was restrained by a steep decline for new electric utility starts. If electric utilities are excluded, total construction starts for this year’s January-July period would be up 11 percent, reflecting a substantial increase for housing.
“July’s modest decline for total construction was the result of diminished activity for public works, which can be volatile on a month-to-month basis depending on the timing of very large projects,” says Robert A. Murray, vice president of economic affairs for McGraw Hill Construction. “Aside from the public works shortfall, the July statistics provided evidence that the hesitant expansion for construction is proceeding. Housing continues to show upward movement … While the recovery for construction may be broadening in scope, the process continues to be tenuous given the ongoing sluggish condition of the U.S. economy.”
Residential building, at $204.1 billion (annual rate), grew 3 percent in July. Multifamily housing rebounded 20 percent after sliding 21 percent in June, regaining the heightened activity that was present earlier in 2013. Through the first seven months of 2013, the leading metropolitan areas for multifamily construction starts (ranked by dollar volume) were the following: New York, Washington, D.C., Boston, Miami and Dallas. Single-family housing in July slipped 1 percent, and over the past several months has essentially leveled off after the strong month-to-month gains that were reported throughout 2012 and early 2013. July’s volume of activity was still high by last year’s standards – up 26 percent from the average monthly pace for single-family housing reported during 2012. By region, single family housing in July showed greater activity in the Midwest, up 4 percent; but declines in the Northeast, South Central and West, each down 2 percent; and the South Atlantic, down 4 percent. Murray says, “The rise in mortgage rates in late spring generated some concern about the prospects for single-family housing, but mortgage rates have since eased back and the inventory of new homes for sale remains very low, which should encourage greater single-family construction in the months ahead.”
The 1 percent increase for total construction starts on an unadjusted basis during the first seven months of 2013 relative to last year was the result of divergent behavior by the three main construction sectors. Residential building, up 29 percent year-to-date, continues to lead the way during 2013, with single-family housing up 31 percent and multifamily housing up 21 percent.
By geography, total construction starts in the first seven months of 2013 revealed gains in three regions – the West, up 9 percent; and the South Central and the Northeast, each up 8 percent. Year-to-date declines were reported for two regions – the Midwest, down 1 percent; and the South Atlantic, down 14 percent. If electric utilities are excluded from the construction start statistics in the South Atlantic, then that region would register a 20 percent year-to-date gain.