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DWC Home | Magazine | Back Issues | May 2007 | Take Note |
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Residential, Commercial Construction Shows Upturn The figures for first quarter 2007 are in and they show a promising trend in home building and commercial property construction — especially if you’re working in the southern United States. According to the U.S. Department of Commerce building permits and housing starts for March both were up over February. Privately-owned housing units authorized by building permits in March for the whole United States were at a seasonally adjusted annual rate of 1.54 million, or 0.8 percent above the revised February rate, it says. Housing starts in March were at 1.52 million, or the same 0.8 percent over February. Although down considerably from a year ago, both figures show an upturn since January 2007. The biggest percentage gain was found in the Midwest, which rose 19.5 percent from 149,000 single-units in February to 178,000 in March. Still, the South leads the country in total units at 569,000 single units in March. The Commerce Dept. notes that it may take up to five months before an underlying trend in total housing starts is established. Its statistics are estimated from sample surveys. In a separate release also in March, the American Institute of Architects (AIA) reported its Architecture Billings Index (ABI), a leading economic indicator of construction activity, was 52.6 (any score above 50 indicates an increase in billings). With an approximate nine- to 12-month lag time between architecture billings and construction spending, and significant inquiry levels for new projects this news continues a forecast that remains favorable for the nonresidential construction market throughout 2007, it says. “After spiking from November through January, the ABI has returned to more modest growth levels seen earlier this past fall,” said AIA Chief Economist Kermit Baker. “Firms are reporting more stable business activity and in some cases are being forced to increase their project backlogs of commercial and institutional projects because of heavy demand for design services over the last 18 months.” AIA’s regional averages show most billings coming in the southern United States: • South 54.8 • Midwest 52.6 • West 51.9 • Northeast 50.2 Baker added, “Due to the strong business conditions over the last year, compensation levels for architecture positions are expected to increase about four percent in 2007, with a significant portion of firms expecting increases in paid overtime as well as in bonuses and profit sharing.” AIA’s Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine- to 12-month glimpse into the future of nonresidential construction activity. The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month. |