Construction and Real Estate - May 2008
Construction and Real Estate
Overall, reports on District housing remain soft. However, some reports suggest that sales growth may be bottoming out in a few markets. Reports from Florida in particular are more positive. Initial reports on April existing home sales in Florida note more modest sales declines than seen in more than a year. Furthermore, several Florida homebuilders contacted in April reported that sales growth turned slightly positive on a year-over-year basis. District data and contact reports continue to indicate declining home prices and anemic levels of new home construction.
Weaker levels of nonresidential development are now apparent in several District markets, particularly in Florida. Vacancy rates were trending up in several markets, and developers reported fewer backlogs. Most commercial contacts anticipate 2008 will be weaker than 2007, and the degree of pessimism has grown from earlier in the year. Contacts noted that tighter lending standards were contributing to the increase in the number of projects being delayed or put on hold. Contractors also reported that bidding had become more competitive. Material prices continued to rise, but labor costs held fairly steady. Several contacts anticipate weakness in nonresidential development will persist into 2009.