This is a post from Jim Haughey's blog that covers the US construction industry.

Jim Haughey is the Chief Economist for Reed Construction Data and has over thirty years experience as a business economist, including twenty years monitoring the construction market. He has a Ph.D. degree in economics from the University of Michigan and has previously taught at the University of Michigan, Ohio University, Michigan State University and the University of Massachusetts.

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Construction Industry Forecasts

Notes from Jim Haughey - Apr 19, 2011

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Housing market rebounds in March
Jim Haughey, RCD Chief Economist

Multifamily building, primarily apartments, will lead the recovery.  Multifamily permits topped starts by a cumulative 7% so far in 2011, including a very strong 189,000 permits in March far ahead of 127,000 starts.  This permit backlog will push apartment starts quickly higher.  Apartments have been the most attractive market to real estate investors since late last year. Vacancy rates are falling and rents rising in most key markets as household decoupling proceeds in pace with expanded hiring.

The single family and condo market face more serious headwinds. Short term,  the recovery is being slowed by the recent surge of real estate listings for distressed and foreclosed properties which have set off a second round of home price cuts.  This headwind will ease later in 2011 since the flow of properties into the foreclosure process has clearly slowed. Long term, the single family and condo recovery will be restrained by the post recession changes in the mortgage market.  Higher down payments and credit score requirements keep several tens of millions of households out of the new home market.

Weaker than expected US economic growth early in 2011 is also contributing to the delayed housing recovery. Both consumer income and confidence are so far tracking below expectations early in 2011. This headwind will persist at least through the spring until oil and other commodity inflation ebbs and a federal spending total through FY 2012 is agreed in Washington.

 


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Read Other Recent Jim Haughey Posts

08/15 - Contractor Survey: Work backlog rises in 2nd Q but may fall in the summer
08/09 - Modest construction recovery will be supported by two more years of cheap credit
07/29 - Sour economic growth report threatens construction recovery
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/27 - Worry about the deficit not the debt limit
07/19 - Housing starts rebound.6% in June after two weak months
07/18 - Congress prepares to postpone resolving the deficit crisis assuring an extended period of subpar eco
07/12 - House Transportation Committee proposes to keep federal highway funding at fuel tax receipt level
07/09 - Don’t count on debt limit deal to restart sustained high economic growth
07/08 - Contractors cut 9,000 jobs in June
07/05 - The cost and frustration of selling a home contributes to the delayed housing recovery
07/05 - May construction spending down 0.6%; recovery still on hold
07/01 - FAA stops works on federally funded runway and control tower projects
06/21 - It is not more jobs that will quicken the economic recovery
06/16 - Mays’ 3.5% gain in housing starts does not signal a housing recovery immediately ahead
06/15 - Cautious spending threatens to delay construction recovery
06/10 - Economic and construction recoveries will be subpar for at least another year
06/09 - NYC construction unions may agree to drop expensive work rules to spur more work
06/04 - Contractors add 2,000 jobs in May; overall job gain disappointingly low

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