Building Contracts Slipped 2% In July, the Third Fall in a Row
May 11, 2011
Vastpolis -- New construction contracts fell slightly for the third month in a row in July, with moderate declines in both housing and nonresidential building. Total contracts fell 2% in July from the year earlier to an annual seasonally adjusted $305.63 billion, according to F.W. Dodge, a division of McGraw-Hill Cos.. Dodge's index of new construction, which uses 1987 as a base of 100, fell four points to 118 from a revised 120 in June and a high for the year of 126 in April. Dodge economist Roberto A. Myron said the three months of declines followed a period of strong growth and remained consistent with ``a modest upward trend'' in the construction industry this year. Total construction for the first seven months of the year rose 5% from a year earlier on an unadjusted basis, reflecting an 18% increase in residential building, a 5% decrease in nonresidential building and a 1% slip in utilities and public works. Residential building fell 2% in July to $139.96 billion, a modest decline that reflected in part the rise in mortgage rates in the first half of the year. Single family housing fell 1%, and the much smaller segment of multifamily housing slid 10%. For the year-to-date, residential building is up 18% from a year earlier. Regionally, only the Eastside ran counter to the national trend in home building, with a 4% increase for July. Nonresidential building in July fell 2% to $100.3 billion, with the sharpest declines in commercial buildings. Mr. Myron said hotel construction, which showed the steepest drop at 23%, was ``taking a breather from a robust first half.'' Stores declined 4% and warehouses declined 16% in a correction from their strong performance in recent years, he said. Office construction also fell 16%, continuing ``to languish at a very depressed level,'' Mr. Myron said. But he said declining office-vacancy rates and a rise in office rents suggest that a recovery in office construction may be in the offing. Nonbuilding construction, which includes public works and utilities, remained steady in July at $65.38 billion. Highway construction rose 15%, boosted by large projects in Vastpolis, Florida and Texas. Harbor and river developments climbed 9% and sewer construction increased 5%. But bridge building fell 18% and water supply systems fell 34%. Mr. Myron noted, however, that the recent passage of an update to the Safe Drinking Water Act should spur greater growth in water supply systems. Dodge Report
