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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


December 2, 2014

Southeast Commercial Construction Continues Gathering Steam

Through September 2014, U.S. total private construction spending increased 3.38 percent from the year-earlier level. How did the various categories stack up in terms of their contribution to this year-over-year increase in total private construction spending? The multifamily and nonresidential categories together accounted for 4.34 percent of the change, and new single-family and residential improvements combined to shave 0.96 percent off the change (see the chart).

Contribution-to-year-over-year

Does commercial construction activity in the Southeast mirror that of the nation? On a quarterly basis, the Atlanta Fed polls southeastern business contacts engaged in commercial construction to track and better understand regional trends in construction activity. The latest poll results appear to tell a story similar to the one that the national numbers depict.

Most respondents indicated that the pace of nonresidential construction activity and the pace of multifamily construction activity in the Southeast continued to be ahead of the year-earlier level (see the charts).

Pace-on-nonresidential

Pace-of-multifamily

More than 80 percent of respondents reported a backlog that was similar to or greater than the year-earlier level, signaling that the pipeline of future activity remains fairly robust (see the chart).

Backlog-vs-year

The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. In the third quarter of 2014, 82 percent of contacts indicated that credit was sufficiently available, compared with 68 percent the previous quarter and 78 percent one year earlier (see the chart).

How-available-do-you

While half of respondents noted that they expect their headcount to remain the same from this quarter to the next, 44 percent of respondents indicated that they were planning to do a modest to significant amount of hiring in the fourth quarter of 2014 (see the chart).

Hiring-plans

Relative to the previous quarter, fewer contacts indicated that they were having a difficult time filling positions (see the chart).

Difficulty-filing

Most contacts reported some degree of upward pressure on labor costs. When looking across the brackets of labor cost increases, most of the pressure seemed to be concentrated in the category indicating that labor costs are up from 3 to 4 percent versus a year ago. This response marks a shift from prior periods, when the pressure appeared concentrated in the bracket indicating that labor costs were up from 1 to 3 percent. Continuing a trend that we’ve noted over the past few quarters, a growing share of contacts (more than 80 percent) indicated that their labor costs had increased more than 3 percent from year-earlier level (see chart).

Labor-costs

The next poll will open on January 5, 2015. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.

Note: Third quarter 2014 poll results were collected October 6–15, 2014, and are based on responses from 18 business contacts. Participants in this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

November 24, 2014

Conditions Soften for Southeastern Housing

The Atlanta Fed's latest poll of regional residential brokers and homebuilders shows an increase in the number of contacts reporting softening home sales and construction activity. The two charts below show indexes near or below zero.

Oct-SE-Home-Sales

Oct-SE-Construction

This softening appears to be the result of normal seasonal factors, but even so, it seems a good time to revisit a question we posed one year earlier, where we ask builders to look ahead over the next 12 months and characterize risks to their outlook.

Interestingly, builder contacts indicated that access to development finance and lot availability continues to pose significant risks to their outlook. They also reported that land position and labor shortages have become more significant risks compared to one year ago (see the table).

Chart_nov_oct

In addition to highlighting the risks that have come into the forefront during the past year, it also seems worthwhile to point out that a few of the risks have fallen off a bit since we last posed this question. For instance, only one-third of respondents considered rising mortgage rates to be significant risk to their outlook in November 2014 compared to two-fifths of respondents in October 2013. And only one-fourth of respondents indicated that consumer confidence was a significant risk to their outlook in November 2014 compared to nearly two-fifths in October 2013.

To explore these results in more detail, or to view other results that were not discussed in this post, please visit our Construction and Real Estate Survey results web page.

Note: The latest poll results, which reflect activity in October 2014, are based on responses from 35 residential brokers and 24 homebuilders and were collected November 3–12. If you would like to participate in this poll, you may sign up here.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

October 30, 2014

Regional Housing Sales, Construction Slowing

The Atlanta Fed conducts a monthly poll of regional residential brokers and homebuilders to track emerging trends in housing markets. The latest results, which reflect activity in September 2014, suggest continued slow growth in sales and construction activity.

Many residential brokers and builders indicated that home sales were flat to slightly up from the year-earlier level. The report from brokers and builders on buyer traffic was mixed. Those who indicated a decline in traffic suggested that seasonal factors and a decline in buyer confidence were behind the decline. A growing share of residential brokers and builders reported that home inventory levels had increased slightly from the year-earlier level. Comments suggested that well-priced homes are moving quickly, but that many sellers are pricing their homes fairly optimistically, causing inventory to build until prices are adjusted.

Many builders reported that construction activity had increased from the year-earlier level. The drop depicted in the chart below reflects the fact that a growing share of builders reported construction activity as flat to down slightly.

September 2014 Southeast Construction Activity

Most builders indicated that they continue to experience upward pressure on materials prices. Builders’ reports ranged widely when we asked them to specify the materials experiencing the greatest pricing pressure, and their responses included concrete, drywall/sheetrock, and lumber. These reports are fairly consistent with year-over-year changes in the Engineering News Record’s cost indices: on a year-earlier basis, concrete prices are up 3–4 percent, drywall/sheetrock products are up 10 percent, and lumber products are up 7–9 percent.

Builders also continued to report upward pressure on labor costs and that they are having a tougher time filling positions compared to a year earlier. In addition to asking about builders’ difficulty filling positions, we posed a special question about labor shortages. Two-thirds of builders indicated that they were experiencing a labor shortage. Reports about the trades most affected by these shortages were also fairly wide-ranging, but there seemed to be a fair amount of consensus around the idea that framers, masons, carpenters, and drywall installers were the hardest tradespeople to come by on job sites. These results are fairly consistent with report released by the National Association of Home Builders earlier this year.

To explore these results in more detail, or to view other results that were not discussed in this post, please see our Construction and Real Estate Survey results.

Note: The latest poll results, which reflect activity in September 2014, are based on responses from 40 residential brokers and 25 homebuilders and were collected October 6–15. Please sign up if you would like to participate in this poll.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department


August 22, 2014

Southeast Commercial Construction Update: Activity Up from Last Year

At the national level, total nonresidential construction spending fell 2.78 percent between May and June but increased 4.6 percent from the year-earlier level. Because nonresidential construction projects tend to take place over longer time horizons, it’s useful to aggregate the data by quarter to smooth out their short-term volatility. Doing so reveals that nonresidential spending increased slightly (just shy of 2 percent) between the first and second quarters of 2014 and that it increased by 6.7 percent from the second quarter in 2013.

Does the Southeast commercial construction picture align with the national one? The Atlanta Fed polls southeastern business contacts engaged in commercial construction each quarter to track and better understand regional trends in construction activity. The latest poll results appear to echo the national story, suggesting that a pickup in commercial construction activity was sustained through the second quarter of 2014.

Most respondents indicated that the pace of nonresidential construction activity in the Southeast was either ahead of the year-earlier level or remained unchanged from the year-earlier level. All contacts reported that the pace of multifamily construction had increased from year-earlier levels (see the charts).

Pace of Nonresidential Construction Activity versus a Year Ago Pace of Multifamily Construction Activity (units) versus a Year Ago

Several comments from respondents help to illustrate these trends:

  • “More projects to go after in all markets, but competition is still very intense.”
  • “Multifamily supply continues to grow at a strong pace.”
  • “For the first time in six years we are beginning to see much larger projects in the healthcare, commercial and industrial markets.”
  • “Apartment construction remains at a high level and brings concerns that the market will become overbuilt. Each month it seems there are more announcements for new apartment projects.”

Half of all respondents reported that backlog was greater than the year-earlier level; the other half indicated that backlog was similar to the year-earlier level. Although this response represents a drop from the last two quarterly measures of 89 percent and 76 percent, it is still an indication that the pipeline of future activity remains fairly robust.

The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. Sixty-eight percent of contacts in the second quarter 2014 indicated that credit was sufficient, compared with 60 percent the previous quarter and 57 percent one year earlier (see the chart).

How available do you perceive commercial construction finance to be in your market?

The majority of contacts reported that they plan to increase hiring during the next quarter. Seventy-five percent of contacts in the second quarter 2014 reported that they were planning to do modest to significant hiring, slightly down from 79 percent the previous quarter but up from 57 percent one year earlier (see the chart).

Hiring Plans for Next Quarter versus This Quarter

Compared with a year earlier, more contacts (roughly one out of three) indicated that they were having a difficult time filling positions (see the chart).

Difficulty Filling Positions versus a Year Ago

All contacts reported some degree of upward pressure on labor costs. Sixty percent of contacts indicated that their labor costs had increased more than 3 percent from year-earlier levels. A growing share reported labor cost increases of 6 percent or more (see the chart).

Labor Costs versus a Year Ago

The next poll will open on October 6, 2014. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.

Note: Second quarter 2014 poll results were collected July 7–16, 2014 and are based on responses from 20 business contacts. Participants of this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department


December 2, 2014

Southeast Commercial Construction Continues Gathering Steam

Through September 2014, U.S. total private construction spending increased 3.38 percent from the year-earlier level. How did the various categories stack up in terms of their contribution to this year-over-year increase in total private construction spending? The multifamily and nonresidential categories together accounted for 4.34 percent of the change, and new single-family and residential improvements combined to shave 0.96 percent off the change (see the chart).

Contribution-to-year-over-year

Does commercial construction activity in the Southeast mirror that of the nation? On a quarterly basis, the Atlanta Fed polls southeastern business contacts engaged in commercial construction to track and better understand regional trends in construction activity. The latest poll results appear to tell a story similar to the one that the national numbers depict.

Most respondents indicated that the pace of nonresidential construction activity and the pace of multifamily construction activity in the Southeast continued to be ahead of the year-earlier level (see the charts).

Pace-on-nonresidential

Pace-of-multifamily

More than 80 percent of respondents reported a backlog that was similar to or greater than the year-earlier level, signaling that the pipeline of future activity remains fairly robust (see the chart).

Backlog-vs-year

The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. In the third quarter of 2014, 82 percent of contacts indicated that credit was sufficiently available, compared with 68 percent the previous quarter and 78 percent one year earlier (see the chart).

How-available-do-you

While half of respondents noted that they expect their headcount to remain the same from this quarter to the next, 44 percent of respondents indicated that they were planning to do a modest to significant amount of hiring in the fourth quarter of 2014 (see the chart).

Hiring-plans

Relative to the previous quarter, fewer contacts indicated that they were having a difficult time filling positions (see the chart).

Difficulty-filing

Most contacts reported some degree of upward pressure on labor costs. When looking across the brackets of labor cost increases, most of the pressure seemed to be concentrated in the category indicating that labor costs are up from 3 to 4 percent versus a year ago. This response marks a shift from prior periods, when the pressure appeared concentrated in the bracket indicating that labor costs were up from 1 to 3 percent. Continuing a trend that we’ve noted over the past few quarters, a growing share of contacts (more than 80 percent) indicated that their labor costs had increased more than 3 percent from year-earlier level (see chart).

Labor-costs

The next poll will open on January 5, 2015. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.

Note: Third quarter 2014 poll results were collected October 6–15, 2014, and are based on responses from 18 business contacts. Participants in this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

November 24, 2014

Conditions Soften for Southeastern Housing

The Atlanta Fed's latest poll of regional residential brokers and homebuilders shows an increase in the number of contacts reporting softening home sales and construction activity. The two charts below show indexes near or below zero.

Oct-SE-Home-Sales

Oct-SE-Construction

This softening appears to be the result of normal seasonal factors, but even so, it seems a good time to revisit a question we posed one year earlier, where we ask builders to look ahead over the next 12 months and characterize risks to their outlook.

Interestingly, builder contacts indicated that access to development finance and lot availability continues to pose significant risks to their outlook. They also reported that land position and labor shortages have become more significant risks compared to one year ago (see the table).

Chart_nov_oct

In addition to highlighting the risks that have come into the forefront during the past year, it also seems worthwhile to point out that a few of the risks have fallen off a bit since we last posed this question. For instance, only one-third of respondents considered rising mortgage rates to be significant risk to their outlook in November 2014 compared to two-fifths of respondents in October 2013. And only one-fourth of respondents indicated that consumer confidence was a significant risk to their outlook in November 2014 compared to nearly two-fifths in October 2013.

To explore these results in more detail, or to view other results that were not discussed in this post, please visit our Construction and Real Estate Survey results web page.

Note: The latest poll results, which reflect activity in October 2014, are based on responses from 35 residential brokers and 24 homebuilders and were collected November 3–12. If you would like to participate in this poll, you may sign up here.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

October 30, 2014

Regional Housing Sales, Construction Slowing

The Atlanta Fed conducts a monthly poll of regional residential brokers and homebuilders to track emerging trends in housing markets. The latest results, which reflect activity in September 2014, suggest continued slow growth in sales and construction activity.

Many residential brokers and builders indicated that home sales were flat to slightly up from the year-earlier level. The report from brokers and builders on buyer traffic was mixed. Those who indicated a decline in traffic suggested that seasonal factors and a decline in buyer confidence were behind the decline. A growing share of residential brokers and builders reported that home inventory levels had increased slightly from the year-earlier level. Comments suggested that well-priced homes are moving quickly, but that many sellers are pricing their homes fairly optimistically, causing inventory to build until prices are adjusted.

Many builders reported that construction activity had increased from the year-earlier level. The drop depicted in the chart below reflects the fact that a growing share of builders reported construction activity as flat to down slightly.

September 2014 Southeast Construction Activity

Most builders indicated that they continue to experience upward pressure on materials prices. Builders’ reports ranged widely when we asked them to specify the materials experiencing the greatest pricing pressure, and their responses included concrete, drywall/sheetrock, and lumber. These reports are fairly consistent with year-over-year changes in the Engineering News Record’s cost indices: on a year-earlier basis, concrete prices are up 3–4 percent, drywall/sheetrock products are up 10 percent, and lumber products are up 7–9 percent.

Builders also continued to report upward pressure on labor costs and that they are having a tougher time filling positions compared to a year earlier. In addition to asking about builders’ difficulty filling positions, we posed a special question about labor shortages. Two-thirds of builders indicated that they were experiencing a labor shortage. Reports about the trades most affected by these shortages were also fairly wide-ranging, but there seemed to be a fair amount of consensus around the idea that framers, masons, carpenters, and drywall installers were the hardest tradespeople to come by on job sites. These results are fairly consistent with report released by the National Association of Home Builders earlier this year.

To explore these results in more detail, or to view other results that were not discussed in this post, please see our Construction and Real Estate Survey results.

Note: The latest poll results, which reflect activity in September 2014, are based on responses from 40 residential brokers and 25 homebuilders and were collected October 6–15. Please sign up if you would like to participate in this poll.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department


August 22, 2014

Southeast Commercial Construction Update: Activity Up from Last Year

At the national level, total nonresidential construction spending fell 2.78 percent between May and June but increased 4.6 percent from the year-earlier level. Because nonresidential construction projects tend to take place over longer time horizons, it’s useful to aggregate the data by quarter to smooth out their short-term volatility. Doing so reveals that nonresidential spending increased slightly (just shy of 2 percent) between the first and second quarters of 2014 and that it increased by 6.7 percent from the second quarter in 2013.

Does the Southeast commercial construction picture align with the national one? The Atlanta Fed polls southeastern business contacts engaged in commercial construction each quarter to track and better understand regional trends in construction activity. The latest poll results appear to echo the national story, suggesting that a pickup in commercial construction activity was sustained through the second quarter of 2014.

Most respondents indicated that the pace of nonresidential construction activity in the Southeast was either ahead of the year-earlier level or remained unchanged from the year-earlier level. All contacts reported that the pace of multifamily construction had increased from year-earlier levels (see the charts).

Pace of Nonresidential Construction Activity versus a Year Ago Pace of Multifamily Construction Activity (units) versus a Year Ago

Several comments from respondents help to illustrate these trends:

  • “More projects to go after in all markets, but competition is still very intense.”
  • “Multifamily supply continues to grow at a strong pace.”
  • “For the first time in six years we are beginning to see much larger projects in the healthcare, commercial and industrial markets.”
  • “Apartment construction remains at a high level and brings concerns that the market will become overbuilt. Each month it seems there are more announcements for new apartment projects.”

Half of all respondents reported that backlog was greater than the year-earlier level; the other half indicated that backlog was similar to the year-earlier level. Although this response represents a drop from the last two quarterly measures of 89 percent and 76 percent, it is still an indication that the pipeline of future activity remains fairly robust.

The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. Sixty-eight percent of contacts in the second quarter 2014 indicated that credit was sufficient, compared with 60 percent the previous quarter and 57 percent one year earlier (see the chart).

How available do you perceive commercial construction finance to be in your market?

The majority of contacts reported that they plan to increase hiring during the next quarter. Seventy-five percent of contacts in the second quarter 2014 reported that they were planning to do modest to significant hiring, slightly down from 79 percent the previous quarter but up from 57 percent one year earlier (see the chart).

Hiring Plans for Next Quarter versus This Quarter

Compared with a year earlier, more contacts (roughly one out of three) indicated that they were having a difficult time filling positions (see the chart).

Difficulty Filling Positions versus a Year Ago

All contacts reported some degree of upward pressure on labor costs. Sixty percent of contacts indicated that their labor costs had increased more than 3 percent from year-earlier levels. A growing share reported labor cost increases of 6 percent or more (see the chart).

Labor Costs versus a Year Ago

The next poll will open on October 6, 2014. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.

Note: Second quarter 2014 poll results were collected July 7–16, 2014 and are based on responses from 20 business contacts. Participants of this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.

Photo of Jessica DillBy Jessica Dill, senior economic research analyst in the Atlanta Fed's research department