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December 2016 Construction Economic Outlook

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Multifamily building activity (+74.5%) bounced back sharply in October, after plummeting in September (-38.9%), to drive combined housing starts to +25.5% month-over-month, Census Bureau data shows. Combined starts surged to its highest level since August 2007.

Excluding residential work, construction starts in October posted a solid 15.1% increase month-over-month, according to data compiled by ConstructConnect, led by a sizable gain in the institutional category (+31.5%). Starts are also up 11.0% year-over-year.

Total starts are forecast to climb 5% in 2017, Dodge Data and Analytics said in its 2017 Construction Outlook. The residential sector is predicted to rise 8%, with single-family building expanding by 12% in dollar terms and 9% in units.

Notable Numbers
image  The single-family sector (869,000 units, +10.7%) comprised well over half of the 1.3 million combined starts in October, but multifamily substantially outperformed its counterpart with a 74.5% jump on 454,000 units.

image  All three homebuilding sectors posted solid year-over-year gains in October: combined starts are +23.3%; single-family is +21.7%; and multifamily is +28.2%. Year-to-date, combined starts are +5.9% and single-family is +10.1%, however, multifamily is -1.8%.

image  In the Northeast, October combined permits are -21.1% month-over-month; -19.2% year-over-year; and -32.2% year-to-date. In contrast, the Midwest has been consistent in a positive sense: +12.1% month-over-month; +15.9% year-over-year; and +11.7% year-to-date.

The Architectural Billings Index, maintained by the American Institute of Architects, broke a two-month losing streak by gaining 2.4 points in October to a reading of 50.8. The ABI measures nonresidential projects in the works, and moved back above its benchmark of 50.

Regional Report
Voters in Portland, Ore., passed a $258.4 million bond to construct 1,300 affordable housing units according to Oregon Public Broadcasting: 600 of which are reserved for households earning less than 30% of the area's median income.

San Jose, Calif., has the fifth largest carbon footprint of the 100 biggest cities in the nation, but it also has the highest percentage (24%) of home listings with energy-efficient technology, according to a new survey by Zillow. Buffalo, N.Y., has the smallest carbon footprint of U.S. cities, and just 3% of its home listings feature the same technology.

Avi Homes and Pacesetter Homes have started construction in Austin of the largest zero-energy housing community in the nation, at a cost of $2 billion, according to the website, Builder. Reservations are being taken for the first 237 homes that will be occupant-ready in 2017.

Anomolies (National percentages in parentheses)
Multifamily Starts (+68.8)
Midwest: +166.7%
Northeast: +105.6%
Combined Permits (+0.3)
Northeast: -21.1%
Combined Completions (+5.5)
Northeast: -19.6%
Midwest: +54.5%

Combined Permits (+4.6)
Northeast: -19.2%
Combined Completions (+7.2)
Northeast: -32.8%

Multifamily Starts (-1.5)
Midwest: +38.4%
Northeast: -30.4%
Combined Permits (+0.7)
Northeast: -32.2%

At least three building contractor associations, including Associated Builders and Contractors Colorado, have jointly launched Construction Careers Now, a pre-apprenticeship training program to bring more qualified workers into that state's building industry.

In its third quarter 2016 Inventory and Price Watch, real estate website Trulia reported that the U.S. housing stock fell for the fifth straight quarter, resulting in a 6.7% year-over-year decline in total inventory.

Voters approved nearly 70% of the 280 transportation-related measures that appeared on general election ballots in 22 states, according to the American Road and Transportation Builders Association (ARTBA). Those initiatives will fund state and local transportation system upgrades.

As seen in LC/DBM magazine, December 2016.

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June 17, 2019, 8:45 am PDT

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