Landscape Contractor / Design Build Maintain

AUG 2018

LC/DBM provides landscape contractors with Educational, Imaginative and Practical information about their business, their employees, their machines and their projects.

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With both single-family and multifamily numbers dramatically off, housing starts dove 12.3 percent month- over-month in June according to the most recent report. The biggest loser was the Midwest, where starts plummet - ed 35.8 percent after rocketing up 51.9 percent in May. According to the Wells Fargo Securities Economic Group, this extreme fluctuation may owe its origin to "unusual seasonal distortions that caused an unusually large propor - tion of starts for the first six months of 2018 to occur in May." In the West starts shed 3.0 percent mostly in the single-family category. Northeast numbers were down 6.8 percent in June, totally in the multifamily category. 22 LC DBM Economic Update Single-family residential authorizations managed nearly a 1 percent increase in June month-to-month, giving them a +6.6 percent year-to-date mark, but it was not enough to lift total permits for the month as multifamily authoriza - tions' 7.6 percent drop put the total at -2.2 percent: the third straight month residential authorizations lost ground. Sam Khater, chief economist for Freddie Mac noted that single-family construction permits were decelerating as homeownership is rising. And the Wells Fargo Securities Economics Group cites a lack of affordable homes as the most common reason for the ongoing decrease in consumers' confidence in buying a home presently. In the latest report, new home sales dropped 5.3 percent while inventory of new houses is on the upswing, though most of the expansion can be attributed to homes not yet started as the inventory of completed homes "remain near historic lows." Mark Vitner, a senior economist with Wells Fargo, states, "Housing simply is not going to strengthen as much as had been hoped. Higher mortgage rates and rising home prices are appar - ently a bigger hurdle than policymakers expected." This is the second time that new home sales have fallen in the last three months. The Architecture Billing Index was off slightly month over month but still showed that business was up. The drop was 1.6 points to 51.3: but above the 50 point threshold needed to indi - cate there were more billings in June than in May. And it is the ninth consecutive month to register an expansion. The commer - cial/industrial and residential sectors had a good showing, as did the South as a region. Its score was up 2.1 points to 57.4. Even though the institutional sec - tor was actually below 50 in the latest index, the overall increases in architecture ser - vice billings bodes well for the construction industry moving forward. Nonresidential construction starts in the first half of this year were down 5.5 percent from the same period last year accord - ing to construction industry data firm ConstructConnect. The commercial sector was the biggest dud at minus 23.7 percent followed by institutional with a 12.3 percent drop. However the industrial sector was up 35.8 percent and heavy engineering kicked in with a 13.4 gain. The largest percentage drop of the big four subcategories in the commercial sector in the first six months of 2018 was private office starts at negative 34.2 per - cent. Hotel/motel starts didn't help, registering a 17.0 percent loss, nor did the warehouse and retail/shopping subcategories; both shedding 16.7 percent. June Housing Starts Falter After Strong May Single-Family Housing Permits Grow While Multifamily Permits Drop New Home Sales Get Pinched by Supply ABI Remains in Positive Territory Nonresidential Starts Not Off to Stellar Start in 2018 On the strength of a 57 percent month-to-month increase of nonresidential starts, total construction starts in June 11 percent over May according to Dodge Data & Analytics. This was the second double-digit gain in a row, following the 15 percent hike that was reported for May over April. Residential building for the month grew 4 per - cent helped by 9 percent growth for multifamily housing. But the non-building construction sector (public works and electric utilities) fell 28 percent in June. Through the first six months of the year, total construction starts were up 1 percent from the same period a year ago. Total Construction Starts Have Good Month

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