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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.


November 7, 2014

South Florida Maintains Momentum

In a SouthPoint post in August, I discussed improving economic conditions in South Florida. This momentum is continuing into the last quarter of 2014, with business activity generally strong and some new developments in business investment.

From mid-September to the end of October, business contacts for the Miami Branch of the Atlanta Fed continued to indicate improving business sentiment in the region. Economic activity and overall demand reflect steady growth. One exception to this steadily improving performance is the real estate market, which remains a very active sector in South Florida, with prices continuing to increase.

Employment and labor markets
Business contacts continued to report a concern with a skill-set gap between job seekers and available job opportunities. Contacts across several sectors report difficulty finding skilled labor for specialized positions in technology, mathematics, engineering, management, and lending. In a few sectors, the labor market was reported as tightening.

Contacts in the hospitality industry discussed how the tourism sector's expansion has resulted in job growth. The application of technology has reduced the need for some labor resources. However, creating "experiences" for travelers still requires a human touch, thus the need for additional workers as the sector expands and new venues come online. The part-time to full-time employee ratio has remained stable for some time in this sector, with contract workers being used for specific projects. (Speaking of tourism, industry contacts continue to report construction of new hotels, sports venues, and other attractions, in addition to the renovation of restaurants, hotels, and convention centers.)

Costs, prices, and wages
Business contacts reported some increases in costs, primarily in rent, total compensation, and commodities. Increases in construction costs were mainly associated with increasing land and labor costs. Rising commodity prices were affecting the ability to increase prices and improve profit margins. Contacts reported that—with the exception of the real estate and food services sectors—passing through price increases has met with little success, although many contacts have attempted to raise prices or are considering doing so in the near future.

The commercial real estate rental market remains quite active. Real estate professionals are reporting that as a result of a shortage of industrial space, landlords are able to increase rents, spurring an increase in average asking rents.

Contacts continue to report increasing wage pressures for specific skilled labor. Rising health care costs have been described as a significant concern that is driving total compensation costs up. The reports were mixed as to the percentage of increases, although most said increases ranged between 10 percent and 20 percent. Some contacts are absorbing these costs rather than increasing wages, and others have passed on some or all of the cost to the employee.

Availability of credit and investment
Banking sector contacts all reported being well capitalized, though small businesses noted continued credit constraint. Contacts in regional banking expect the combination of traditional and nontraditional structures (for example, supply-chain financing and accounts receivable purchases) to gain momentum through the end of the year and into 2015.

The number of reports of investments and capital expenditures increased. South Florida real estate companies indicated little slowdown in foreign capital moving into the market. The prevailing perspective is that the United States still offers a strong safe haven.

Overall, South Florida business contacts continue to report positive activity, and an optimistic outlook prevails in the near term.

By Marycela Diaz-Unzalu, a senior Regional Economic Information Network analyst at the Atlanta Fed's Miami Branch

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


October 6, 2014

Southeast Housing Shows Slow but Steady Growth

The Atlanta Fed polls its residential broker and home builder business contacts once a month to keep a close pulse on current trends in residential real estate and construction. The latest poll results, which reflect activity in August 2014, suggest that growth continues at a slow and steady pace.

The majority of homebuilder respondents indicated that home sales were flat to slightly up from the year-earlier level (see the chart). The report from residential brokers was somewhat mixed.

August 2014 SE Home Sales v Year Earlier

A look at recent regional home sales statistics from the metropolitan statistical area perspective appears to confirm this portrait (see the table).

Existing Year-over-Year Home Sales Growth, August 2014

The majority of builders indicated that buyer traffic was up from the year-earlier level, and the report from brokers was again mixed. Many brokers and builders reported that home inventory levels remained flat or were down from the year-earlier level. Most contacts continued to note that home prices were up slightly in August compared with year-ago levels.

The majority of builders reported that construction activity had increased from the year-earlier level (see the chart).

Existing Year-over-Year Home Sales Growth, August 2014

The incoming data appear to confirm this report of increasing construction activity. In the chart below, I’ve calculated the year-over-year percent change in U.S. single-family housing starts and separated out the contribution that each Sixth District state made to the total change. The stacked bar farthest to the right represents the August 2014 data point and reveals that the states making up the Sixth District all contributed positively to the 4.2 percent year-over-year increase in single-family starts at the national level.

Note: The latest poll results, which reflect activity in August 2014, are based on responses from 38 residential brokers and 19 homebuilders and were collected September 2–10.

By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

August 27, 2014

Southeast Housing Update: Exploring the Recent Slowdown

Following several months of somewhat disappointing reports on home sales and housing starts, we decided that it was time to ask the residential brokers and builders who participate in our monthly housing market poll to revisit the factors that may be contributing to slower-than-hoped-for growth.

When housing’s momentum began slowing in mid-2013, many contacts pointed to rising mortgage rates as the reason. Then in early 2014, many attributed the continued sluggishness to inclement weather. Although it seemed that weather did, in fact, play a role, our business contacts reported that less affordable buying conditions (for example, higher rates and prices) and limited inventory were greater culprits.

So what is the reason now? Our latest poll results suggest that contacts continue to believe that less affordable buying conditions and limited inventory—plus tight credit conditions—are the main factors behind the slowing activity (see the table).

Factors Influencing the Slow Growth of the Housing Market

Although the results of this special question help us as we think through what might be contributing to the weak growth, it is important to acknowledge that the incoming data (and upwardly revised data from the past few months) suggest that housing activity might not actually be slowing to the degree we previously thought. And in fact, a quick look at the latest poll results (without considering the special question) might also lead one to conclude that regional housing market conditions remain fairly positive. To explore the latest results in more detail, please view our Construction and Real Estate Survey results.

Note: The latest poll results reflect activity in July 2014 and are based on responses from 44 residential brokers and 16 homebuilders and were collected August 4–13. If you would like to participate in this poll, please consider signing up.

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


November 7, 2014

South Florida Maintains Momentum

In a SouthPoint post in August, I discussed improving economic conditions in South Florida. This momentum is continuing into the last quarter of 2014, with business activity generally strong and some new developments in business investment.

From mid-September to the end of October, business contacts for the Miami Branch of the Atlanta Fed continued to indicate improving business sentiment in the region. Economic activity and overall demand reflect steady growth. One exception to this steadily improving performance is the real estate market, which remains a very active sector in South Florida, with prices continuing to increase.

Employment and labor markets
Business contacts continued to report a concern with a skill-set gap between job seekers and available job opportunities. Contacts across several sectors report difficulty finding skilled labor for specialized positions in technology, mathematics, engineering, management, and lending. In a few sectors, the labor market was reported as tightening.

Contacts in the hospitality industry discussed how the tourism sector's expansion has resulted in job growth. The application of technology has reduced the need for some labor resources. However, creating "experiences" for travelers still requires a human touch, thus the need for additional workers as the sector expands and new venues come online. The part-time to full-time employee ratio has remained stable for some time in this sector, with contract workers being used for specific projects. (Speaking of tourism, industry contacts continue to report construction of new hotels, sports venues, and other attractions, in addition to the renovation of restaurants, hotels, and convention centers.)

Costs, prices, and wages
Business contacts reported some increases in costs, primarily in rent, total compensation, and commodities. Increases in construction costs were mainly associated with increasing land and labor costs. Rising commodity prices were affecting the ability to increase prices and improve profit margins. Contacts reported that—with the exception of the real estate and food services sectors—passing through price increases has met with little success, although many contacts have attempted to raise prices or are considering doing so in the near future.

The commercial real estate rental market remains quite active. Real estate professionals are reporting that as a result of a shortage of industrial space, landlords are able to increase rents, spurring an increase in average asking rents.

Contacts continue to report increasing wage pressures for specific skilled labor. Rising health care costs have been described as a significant concern that is driving total compensation costs up. The reports were mixed as to the percentage of increases, although most said increases ranged between 10 percent and 20 percent. Some contacts are absorbing these costs rather than increasing wages, and others have passed on some or all of the cost to the employee.

Availability of credit and investment
Banking sector contacts all reported being well capitalized, though small businesses noted continued credit constraint. Contacts in regional banking expect the combination of traditional and nontraditional structures (for example, supply-chain financing and accounts receivable purchases) to gain momentum through the end of the year and into 2015.

The number of reports of investments and capital expenditures increased. South Florida real estate companies indicated little slowdown in foreign capital moving into the market. The prevailing perspective is that the United States still offers a strong safe haven.

Overall, South Florida business contacts continue to report positive activity, and an optimistic outlook prevails in the near term.

By Marycela Diaz-Unzalu, a senior Regional Economic Information Network analyst at the Atlanta Fed's Miami Branch

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


October 6, 2014

Southeast Housing Shows Slow but Steady Growth

The Atlanta Fed polls its residential broker and home builder business contacts once a month to keep a close pulse on current trends in residential real estate and construction. The latest poll results, which reflect activity in August 2014, suggest that growth continues at a slow and steady pace.

The majority of homebuilder respondents indicated that home sales were flat to slightly up from the year-earlier level (see the chart). The report from residential brokers was somewhat mixed.

August 2014 SE Home Sales v Year Earlier

A look at recent regional home sales statistics from the metropolitan statistical area perspective appears to confirm this portrait (see the table).

Existing Year-over-Year Home Sales Growth, August 2014

The majority of builders indicated that buyer traffic was up from the year-earlier level, and the report from brokers was again mixed. Many brokers and builders reported that home inventory levels remained flat or were down from the year-earlier level. Most contacts continued to note that home prices were up slightly in August compared with year-ago levels.

The majority of builders reported that construction activity had increased from the year-earlier level (see the chart).

Existing Year-over-Year Home Sales Growth, August 2014

The incoming data appear to confirm this report of increasing construction activity. In the chart below, I’ve calculated the year-over-year percent change in U.S. single-family housing starts and separated out the contribution that each Sixth District state made to the total change. The stacked bar farthest to the right represents the August 2014 data point and reveals that the states making up the Sixth District all contributed positively to the 4.2 percent year-over-year increase in single-family starts at the national level.

Note: The latest poll results, which reflect activity in August 2014, are based on responses from 38 residential brokers and 19 homebuilders and were collected September 2–10.

By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department

August 27, 2014

Southeast Housing Update: Exploring the Recent Slowdown

Following several months of somewhat disappointing reports on home sales and housing starts, we decided that it was time to ask the residential brokers and builders who participate in our monthly housing market poll to revisit the factors that may be contributing to slower-than-hoped-for growth.

When housing’s momentum began slowing in mid-2013, many contacts pointed to rising mortgage rates as the reason. Then in early 2014, many attributed the continued sluggishness to inclement weather. Although it seemed that weather did, in fact, play a role, our business contacts reported that less affordable buying conditions (for example, higher rates and prices) and limited inventory were greater culprits.

So what is the reason now? Our latest poll results suggest that contacts continue to believe that less affordable buying conditions and limited inventory—plus tight credit conditions—are the main factors behind the slowing activity (see the table).

Factors Influencing the Slow Growth of the Housing Market

Although the results of this special question help us as we think through what might be contributing to the weak growth, it is important to acknowledge that the incoming data (and upwardly revised data from the past few months) suggest that housing activity might not actually be slowing to the degree we previously thought. And in fact, a quick look at the latest poll results (without considering the special question) might also lead one to conclude that regional housing market conditions remain fairly positive. To explore the latest results in more detail, please view our Construction and Real Estate Survey results.

Note: The latest poll results reflect activity in July 2014 and are based on responses from 44 residential brokers and 16 homebuilders and were collected August 4–13. If you would like to participate in this poll, please consider signing up.

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