Dodge, ABI, NAHB measures imply possible flattening; Phoenix has largest population gain

The "value of new construction starts in April fell 15% [at] a seasonally adjusted annual rate,pulling back following the 16% hike that was reported in March," Dodge Data & Analytics reportedon Wednesday. "Nonbuilding construction, which is comprised of public works and electric utilities/gas plants, plunged 31% from its elevated March amount, which was lifted by the start of the $4.3 billion Calcasieu Pass liquefied natural gas (LNG) export terminal in Cameron, La. Nonresidential building fell 18% in April after being boosted in March by groundbreaking for the $1.6 billion Toyota-Mazda automotive manufacturing facility in Huntsville, Ala., among other large projects. Nonresidential building in April did receive support from the start of the $1.3 billion new airport terminal project at Kansas City International Airport. Meanwhile, residential buildingin April decreased 1%, as a modest rebound for multifamily housing was outweighed by further slippage for single-family housing...On a 12-month moving total basis, total construction starts for the 12 months ending April 2019 held steady with the corresponding amount for the 12 months ending April 2018....By major sector, nonresidential building rose 4%, with commercial building up 9%, manufacturing building up 7%, and institutional building unchanged. Residential building held steady with the previous period, with single-family housing unchanged and multifamily housing up 1%. Nonbuilding construction dropped 6%, with electric utilities/gas plants down 1% and public works down 7%."

         The Architecture Billings Index (ABI) topped the breakeven 50 mark in April with a seasonally adjusted score of 50.5, after slipping below 50 in March (to 47.8) for the first time since January 2017, the American Institute of Architects reported on Thursday. The ABI measures the percentage of surveyed architecture firms that reported billings were higher than a month earlier, less the percentage reporting lower billings; scores below 50, on a 0-100 scale, suggest billings decreased overall. The three-month moving average—a way to smooth out monthly fluctuations—fell to 49.5 (the February reading was 50.3), the first average reading below 50 since 2012, suggesting a possible slowdown in building constructionin the next year. Scores (based on three-month moving averages) for three practice specialties were below 50 for the second month in a row: institutional, 49.2, up slightly from 49.1 in March; residential (mainly multifamily), 47.4, down from 47.7; and commercial/industrial, 46.6, down from 47.8. Among respondents, 52% "indicated that nervousness about the economic outlookwas affecting their clients either modestly [38%], seriously [11%] or a great deal [3%]. This was generally consistent at firms regardless of size, location or specialization, but the degree of client nervousness was modestly higher at firms located in the Northeast, as well as at firms with a multifamily residential specialization. Of firms that indicated their clients were at least modestly nervous about the economic outlook, [24% indicated that their clients have not yet taken any actions in response. Of the remainder,] 62% reported that clients have reacted by slowing or stalling projects [, 36%] reported that clients have scaled back project budgets, while 17% reported that there has been an increase in changes in materials/material substitutions....And when asked about the extent to which various project types have been affected by ongoing economic uncertainty, firms indicated that there was generally little impact overall. The largest share of firms reported that multifamily residential projects were affected to a great extent (23%) followed by commercial/industrial projects. For other project types, generally around just 10-11% of firms indicated that those project types were affected to a great extent."

         "Builder and developer confidence in the multifamily market weakened in the first quarter of [Q1] 2019," the National Association of Home Builders reported on Thursday in its latest Multifamily Market Survey, comprising the "Multifamily Production Index (MPI) and the Multifamily Vacancy Index (MVI). The MPI, which measures...sentiment about current market conditions, dropped seven points to 40 in [Q1], the lowest reading since [Q3] 2010...The MPI and...its components sit on a scale of 0 to 100, with numbers below 50 indicating that more respondents report that conditions are getting worse than report conditions are improving.The MPI is a weighted average of three components [, all of which] fell: the component measuring low-rent [tax-credit or subsidized units] fell one point to 47, the one measuring market-rate rentals decreased seven points to 42, and the for-sale [condominium] units component dropped 13 points to 31. In [Q1] 2019 the MVI, which measures the multifamily market industry's perception of vacancies, rose three points to 48, with higher numbers indicating more vacancies. [The MVI] sits on a scale ranging from 0 to 100, where a number under 50 indicates that more respondents believe vacancies are decreasing than increasing. The reading of 48 in [Q1] 2019 is the highest since [Q1] 2010.Historically, the MPI and MVI have performed well as leading indicators of [likely movement in] U.S. Census figures for multifamily starts and vacancy rates,...one to three quarters in advance. The MPI plateaued at 53 in [Q4] 2017 and [Q1] 2018, ...trending downwards since then. Meanwhile, the Census series on multifamily starts hit a peak in [Q1] 2018,...drifting down since" Q2.

         Phoenix had the largest increase in population (25,288) between July 1, 2017 and July 1, 2018 of any city, while Buckeye, Ariz. had the largest percentage gain (8.5%) among cities with 50,000 or more residents, the Census Bureau reported on Thursday. Texas had seven of the 15 fastest-growing cities and five of the 15 largest numerical gainers. Texas added the most housing units (172,000), while Utah had the largest percentage increase (2.2%). The nation added 1.2 million units (0.8%). All of these measures areindicators of demand for—and potentially state and local revenue to support—many types of construction.           

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