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 - Jul 19, 2011

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Housing starts rebound.6% in June after two weak months
Jim Haughey, RCD Chief Economist

Multi family developers are responding to the nearly 1.8 million added jobs in the last seventeen months. The slim 43,000 jobs added in the last two months will temper multi family permits and starts in the second half of the year but will not deter developers from proceeding with starts already underway as long as apartment rents continue to inch higher.

The 9.4% rise in June single family starts does not lift this market off the long cyclical bottom.  The June count is slightly below the 2010 monthly average. June single family starts at 453,000 were about 10% above June permits and the year to date monthly permit average.  The June gain could be random and might be revised away.

The earlier recovery in the multi family sector is not surprising. Renters can sign a contract with less income, less secure income, poorer credit and much less savings than homeowners need to sign a contract.

The latest reports on the single family housing market still show that both homebuilders and prospective buyers are too cautious to permit a rapid recovery in housing starts.  The NAHB monthly index of builders’ sentiment about prospect prospects remains stuck at a depression level. The number of single family homes under construction and the number being completed have both been stuck as a record low level for six months.  Prospective homebuyers have seen their purchasing power cut by commodity inflation and have heightened concerns that resolution of the federal crisis could cut their entitlement payments, raise their taxes or reduce their private income in a slower growth economy.

Single family starts are still expected to rise modestly this summer and then more quickly late in 2011 and in 2012. This is partly due to the second quarter ending on an upturn and partly due to an expected recovery in the economic growth rate from near zero early in the spring to as least subpar during the summer.

 


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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
07/18 - 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
05/25 - No consensus for 2nd quarter GDP growth

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