Construction and Real Estate - July 2008
Construction and Real Estate
Reports on District housing remain soft. In recent months, some reports had indicated that markets were stabilizing, but early reports on June activity indicate that sales weakened further in several areas. Florida builders in particular noted that sales weakened after turning slightly positive in recent months; however, Florida’s existing home market continued to experience steady improvement. New home inventories continued to moderate, but existing home inventories continued to rise by most accounts. Foreclosures continued to add to supply and exert downward pressure on home prices across much of the region. Construction remained at low levels across the District. The outlook from contacts appeared more subdued than in recent months.
Commercial development remained weak across the District, most notably in Florida markets. Vacancy rates were trending up in District markets, and developers continued to report fewer backlogs. Contractors noted that credit tightening and rising costs were curtailing activity. Most commercial contacts anticipate 2008 will be weaker than 2007, and the degree of pessimism has grown from earlier in the year. Material prices continued to rise while more contacts noted rising labor costs. Several contacts anticipate weakness will persist into 2009. However, recent data indicated that the outlook for activity over the next six months improved in District markets outside of Florida.