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March 2016 Economic News

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Total residential and nonresidential building starts were lackluster in 2015, but Construction Market Data Group expects a rebound in 2016. Overall starts are forecast to climb 6.5% to $560 billion this year.

Gilbane Building Company predicts total construction spending will expand by 10.7% in 2015, and another 9.7% in 2016. If the forecast holds true, it would set a new record for a three-year period (2014-2016).

Construction starts jumped 9.8% in January, which is significant, Construction Market Data Group said. That's because starts have been declining by an average of 8.5% in the December-to-January time frame.

A majority of respondents (76%) in a National Association of Home Builders' survey said their most pressing problem in 2016 would be finding qualified workers. It was 53% in 2013; 61% in 2014; and then 71% in 2015.

National Numbers
Architecture Billing Index (ABI): 49.6,
down from 51.3 in December
New projects inquiry index: 55.3,
down from 60.5 in December
Source: American Institute of Architects

Construction - Permits
Single-family: -1.6%
Multi-family: -1.1%
Combined total: -0.2%
Single-family: +9.6%
Multi-family: +17.9%
Combined total: +13.5%
(Year-to-Year) Source: U.S. Census Bureau

Construction - Starts
Single-family: -3.9%
Multi-family: -2.5%
Combined total: -3.8%
Single-family: +3.5%
Multi-family: -3.8%
Combined total: +1.8%
(Year-to-Year) Source: U.S. Census Bureau

Construction - Completion
Single-family: -1.4%
Multi-family: +8.7%
Combined total: +2.0%
Single-family: +2.5%
Multi-family: +20.2%
Combined total: +8.4%
(Year-to-Year) Source: U.S. Census Bureau

Home Sales - Existing Homes
+0.4% from December 2015
+11.0% from January 2015
Source: National Association of Realtors

Home Sales - New Homes
-9.2% from December 2015
-5.2% from January 2015
Source: U.S. Census Bureau

Regional Report
The Northeast region saw some erratic numbers in January compared to the national averages, in parenthesis:
Combined permits month-over-month (-0.2)
Northeast: -55.4%

Combined permits year-over-year (+13.5)
Northeast: -25.6%

This does not seem to be a typical seasonal adjustment, as last year the Northeast was at 29.5% m/m (-0.7%) and 23% y/y (8.1%). Last month, however, this region was plus 62% (-3.9%) m/m and 106.9% (14.4) y/y. A big reason for these numbers is probably New York state developers pushing permits through in December to qualify for the expiring 421a tax break.

Combined starts year-over-year (+1.8)
Northeast: +44.4%

Single-family completions year-over-year (+2.5)
Northeast: +28.6%

Combined completions year-over-year (+8.4)
Northeast: +39.7%

Chalk these positive numbers up to last year's weather in the East, which was one of the snowiest and at times coldest winters on record including January's Winter Storm Juno, nicknamed the Blizzard of 2015. And 2015's comparable numbers confirm the adverse weather's influence as they were all negative the national averages by double digits.

Employment increased in 319 of 342 large counties from June 2014-June 2015, the U.S. Bureau of Labor Statistics reported recently. Utah County, Utah, led all counties (+7.5%); and Ector, Texas, was next (+4.2%). The national job growth rate was 2.0%. A large county is defined as 75,000 or more working people.

Ventura, Calif., led all 342 large counties in terms of average weekly wage increases (+15.2%). Santa Clara, Calif., was next (+11.3%). Olmstead, Minn., had the largest decrease (-5.2%), followed by Ector, Texas (-5.1%).

Metrostudy's fourth-quarter 2015 Home Building Outlook lists Denver, San Francisco, Sarasota, Fla., and Charleston, S.C., as the best overall new home markets. The Sunbelt cities of Dallas, Houston, Phoenix and Atlanta rank highest in terms of sales volume.

The U.S. Green Building Council released its top 10 LEED states for 2015. Illinois is top-ranked with 3.43 square feet of green-certified project space completed per person. The other states are: (in descending order) Maryland, Massachusetts, Washington, Colorado, Nevada, California, Texas, Virginia and Utah.

The Missouri Department of Transportation will receive $1 million in emergency relief funding to repair infrastructure heavily damaged because of flooding from a series of storms that began Dec. 22. The Mississippi, Meramec and Missouri rivers all overflowed and caused extensive damage to roads, interstate highways and bridges.

The Houzz Renovation Barometer, which tracks optimism in the home renovation and design industry, posted high year-over-year readings for the various sectors in that industry in Q4 2015. The landscape/outdoor sector registered a score of 75. A reading over 50 indicates that more firms are reporting that business activity is higher than those reporting it is lower in a given quarter relative to the same quarter of the prior year.

"Both by our estimates and many other estimates of the industry, 2015 was the year that the spending in home renovations hit the level at peak prior to the recession. And so what we're going to be expecting going forward for 2016 is expansion beyond the peak."
- Nino Sitchinava, principal economist at Houzz

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