With or Without a Federal Infrastructure Plan, 2019 is Likely to be a Year of Incremental Gains.
By Mark S. Kuhar and Josephine Patterson
We are still waiting. Last year was supposed to be the year President Trump’s long-promised infrastructure plan came to fruition. That didn’t happen. Going forward, hopes for a new bill rests squarely on the shoulders of the new Democratic majority in the House of Representatives, and it may be the only place they and the Trump administration can find common ground.
Rep. Peter DeFazio (D-Ore.) is first in line to chair the House Transportation and Infrastructure Committee under the new Democratic House majority. The National Stone, Sand and Gravel Association (NSSGA) said it has a great working relationship with the new majority committee staff. An advocate of increasing funding for the Highway Trust Fund, DeFazio has vowed that a top priority will be making the Trust Fund solvent.
In the midterm elections, voters voiced their support for infrastructure. Voters in 12 states re-elected 93 percent of 530 state lawmakers who supported a gas tax increase between 2015 and 2018 and ran for re-election in 2018. Winning state lawmakers in Nov. 6 races included 92 percent of Republicans and 94 percent of Democrats, according to a new analysis from the American Road & Transportation Builders Association’s Transportation Investment Advocacy Center (ARTBA-TIAC).
The results are consistent with those from the last five years that show support for a gas tax increase does not hurt political careers. Including 2018, voters have re-elected 92 percent of nearly 1,900 state lawmakers who voted in favor of a gas tax increase since 2013. This support for lawmakers who approve a gas tax increase persists across party lines as well – more than 90 percent of Democrats and 94 percent of Republicans were re-elected.
Ninety percent of 211 state legislators who voted against a gas tax increase and ran for re-election in 2018 won their races, including 88 percent of Republicans and 96 percent of Democrats. Of the 923 elected officials who voted against a gas tax increase between 2013 and 2018 and ran for re-election, 92 percent were also given another term.
The Public Is On-Board
Voters in 31 states showed their support for transportation infrastructure investments, approving 272, or 79 percent, of 346 state and local ballot measures. In total, the approved initiatives are expected to generate over $30 billion in one-time and recurring revenue, according to the analysis conducted by ARTBA-TIAC.
The 2018 preliminary results reaffirmed the trend of recent years, demonstrating strong voter support for investments to maintain and improve state and local transportation networks. Including 2018, voters have approved 78 percent of nearly 1,700 transportation investment ballot measures tracked by ARTBA-TIAC since 2009.
In the most closely watched initiative of 2018, California voters turned back Proposition 6, an effort to repeal an increase in the state gasoline and diesel motor fuels tax that had been approved by the legislature as part of a 2017 transportation funding law. The 55 percent to 45 percent decision by voters will help preserve more than $50 billion for urgently needed highway, bridge, and transit improvements in California over a 10-year period.
“By soundly rejecting Proposition 6 and re-electing 95 percent of the state legislators who voted in 2017 to increase the state gas tax to fund needed transportation improvements, California voters showed the public continues to support a user funded approach to infrastructure investment. That’s a message the Trump administration and new Congress should heed as they consider a bipartisan infrastructure package and permanent revenue solution for Highway Trust Fund programs next year,” said ARTBA Acting President and CEO William D. Toohey Jr.
The California repeal attempt was part of a larger effort by Congressional leaders to increase Republican voter turnout in several key California Congressional districts. “In ginning up and funding the Prop. 6 repeal initiative as a ‘get out the vote’ ploy, the U.S. House Republican leadership nearly deprived California citizens and businesses of over $5 billion a year in transportation congestion relief projects. That was both wrong and short-sighted,” Toohey added.
Additional highlights of the TIAC report include:
- A proposed state gas tax increase in Missouri met unexpected resistance at the polls, with voters rejecting the measure 54 percent to 46 percent.
- In Colorado, voters rejected two measures to provide new transportation investments. Proposition 109, a measure to provide one-time funding with a $3.5 billion bond, was rejected 39 percent to 61 percent. Proposition 110, which would have increased the state sales tax by 0.62 percent for 20 years and provided an initial jumpstart with a $6 billion bond, also failed, 40 percent to 60 percent.
- Statewide measures to protect transportation funds from being diverted to non-transportation purposes passed in Connecticut and Louisiana.
Earlier in the year, voters approved 192 measures for an additional $6.4 billion in transportation revenue. The market impact of these ballot measures is difficult to project as revenue approved ranges from immediate one-time investment to a contribution made annually for as long as 30 years.
Transportation Construction Forecast
The U.S. transportation infrastructure market is expected to grow 4.2 percent in 2019, according to the annual economic forecast released Dec. 5 by the American Road & Transportation Builders Association (ARTBA).
Increased transportation investment by federal, state and local governments will help drive the growth across all modes, ARTBA Chief Economist Dr. Alison Premo Black said.
Total domestic transportation construction and related-market activity is projected to reach $278.1 billion, up from 2018’s $266.9 billion, after adjusting for project costs and inflation.
The transportation construction market also grew by 4.2 percent in 2018 compared to 2017, driven largely by gains in airport terminal and runway construction, which increased by $5.8 billion, or 33 percent. Spending on public highway and street construction rose by $2.7 billion in 2018.
Black shared the findings in her multimodal forecast during a webinar for analysts, investors, transportation construction market executives and public officials.
One wild card in the forecast, Black said, is the outlook for the scheduled 2020 reauthorization of the FAST Act surface transportation law and the ability of Congress to find additional revenues to support the Highway Trust Fund. “If states start delaying transportation improvement projects in response to uncertainty over the future of the federal program, it will temper 2019 market growth,” Black said.
Although the overall U.S. transportation infrastructure market will see growth next year, the situation will likely vary significantly by state and region, according to Black.
Highway construction market activity is expected to increase in about half of the states and Washington, D.C., California, Florida, Illinois, Pennsylvania, Texas and Virginia have shown significant increases in contract awards over the last year, a leading indicator of highway construction activity in those states. The market should be steady in another five states, with activity expected to slow down in about 20 states.
Some additional factors could impact the highway market in 2018 and beyond, such as developments in Federal Highway Investment. Congress is currently working on the passage of a FY 2019 appropriations bill that could provide an additional $3 to $4 billion in federal-aid highway program investment.
The U.S. Department of Transportation is expected to begin making awards from the $1.5 billion Better Utilizing Investments to Leverage Development (BUILD) program that was approved in the 2018 appropriations bill. This is the discretionary program formerly known as the TIGER grants.
The potential passage of a federal infrastructure bill or the inclusion of a permanent fix for the Highway Trust Fund remains a wild card in the highway market forecast. Any increase in direct federal spending through the federal-aid highway program, which by law must be spent largely on capital outlays, would support additional construction activity across the country.
Other factors include project costs and material prices, steel tariffs, and market capacity, according to Black.
Among other findings in Black’s forecast:
Public & Private Highway, Street & Related Construction
- The real value of public highway, street and related work by state DOTs and local governments – the largest market sector – is expected to increase by 5 percent to $66.5 billion after growing 4.5 percent in 2018.
- Work on private highways, bridges, parking lots and driveways will increase from $65.9 billion in 2018 to $69.1 billion in 2019 and will continue to grow over the next five years as market activity increases in those sectors.
Bridges & Tunnels
- The pace of bridge and tunnel work slowed in 2018, but is expected to grow 1.5 percent next year to $31.7 billion, with the pace increasing to over 2 percent annually in 2020 and beyond.
Light Rail, Subways, & Railroads
- Public transit and rail construction is expected to increase from $19 billion in 2018 to $20 billion in 2019, a 5.7 percent increase.
- Subway and light rail investment is expected to reach a new record level, increasing from $7.7 billion in 2018 to $8.2 billion in 2019.
Airport Runways & Terminals
- After growing 38 percent in 2018, airport terminal and related work, including structures like parking garages, hangars, air freight terminals and traffic towers, is expected to increase from $18.4 billion in 2018 to $19.2 billion, an increase of 4.5 percent.
- Runway work, which was up 18 percent in 2018, is forecasted to increase from $4.9 billion in 2018 to $5.1 billion in 2019.
Ports & Waterways
- The value of port and waterway investment is expected to grow 3 percent to $2.6 billion in 2019. Construction activity in 2018 was $2.5 billion, up from $2.2 billion in 2017.
Dodge Data & Analytics recently released its 2019 Dodge Construction Outlook – a mainstay in construction industry forecasting and business planning. The forecast predicts that total U.S. construction starts for 2019 will be $808 billion, staying essentially even with the $807 billion estimated for 2018.
“Over the past three years, the expansion for the U.S. construction industry has shown deceleration in its rate of growth, a pattern that typically takes place as an expansion matures,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “After advancing 11 percent to 14 percent each year from 2012 through 2015, total construction starts climbed 7 percent in both 2016 and 2017, and a 3 percent increase is estimated for 2018. There are, of course, mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works.
“An important question going into 2019 is whether deceleration is followed by a period of high level stability or a period of decline,” Murray stated. “For 2019, it’s expected that growth for the U.S. economy won’t be quite as strong as what’s taking place in 2018, as the benefits of tax cuts begin to wane. Short-term interest rates will rise, as the Federal Reserve continues to move monetary policy towards a more neutral stance. Long-term interest rates will also rise, reflecting higher inflationary expectations by the financial markets. At the same time, any erosion in market fundamentals for commercial real estate will stay modest. In addition, the greater funding from state and local bond measures passed in recent years will still be present, and it’s likely that federal spending for construction programs will increase once all the federal appropriations bills for fiscal 2019 are finalized. In this environment, it’s forecast that growth for construction starts will decelerate further, but not yet make the transition to the point where the overall volume of activity declines. For 2019, total construction starts are forecast to hold basically steady at $808 billion. By major sector in dollar terms, residential building will be down 2 percent, nonresidential building will match its 2018 amount, and nonbuilding construction will increase 3 percent.”
The pattern of construction starts by more specific segments is the following:
- Single-family housing will be unchanged in dollar terms, alongside a modest 3 percent drop in housing starts to 815,000 (Dodge basis). There will be a slight decline in homebuyer demand as the result of higher mortgage rates, diminished affordability, and reduced tax advantages for home ownership as the result of tax reform.
- Multifamily housing will slide 6 percent in dollars and 8 percent in units to 465,000 (Dodge basis). Market fundamentals such as occupancies and rent growth had shown modest erosion prior to 2018, which then paused this year due to the stronger U.S. economy. However, that erosion in market fundamentals is expected to resume in 2019.
- Commercial building will retreat 3 percent, following 2 percent gains in 2017 and 2018, as well as the substantial percentage increases that took place earlier. While 2018 market fundamentals for offices and warehouses are healthy, next year vacancy rates are expected to rise as the economy slows, slightly dampening construction. Hotel construction will ease back from recent strength, and store construction will experience further weakness.
- Institutional building will advance 3 percent, picking up the pace slightly from its 1 percent gain in 2018 which itself followed an 18 percent hike in 2017. Educational facilities should see continued growth in 2019, supported by funding coming from numerous school construction bond measures. Healthcare projects will make a partial rebound after pulling back in 2018. Airport terminal and amusement-related projects are expected to stay close to the elevated levels of construction starts reported in 2017 and 2018.
- Manufacturing plant construction will rise 2 percent following the 18 percent jump that’s estimated for 2018. The recent pickup in petrochemical plant projects should continue, and cuts in the corporate tax rate from tax reform should encourage firms to invest more in new plant capacity.
- Public works construction will increase 4 percent, reflecting growth by most of the project types. The omnibus federal appropriations bill passed in March provided greater funding for transportation projects that will carry over into 2019, and environmental-related projects are getting a lift from recently passed legislation.
- Electric utilities/gas plants will drop 3 percent, continuing to retreat after the exceptional amount reported back in 2015. New generating capacity continues to come on line, dampening capacity utilization rates for power generation.
The 2019 Dodge Construction Outlook was presented at the 80th annual Outlook Executive Conference held by Dodge Data & Analytics at the Gaylord National Resort and Convention Center in National Harbor, Md.
Aggregates producers are moving full-steam ahead, with or without a new federal infrastructure bill. An estimated 694 million metric tons (Mt) of total construction aggregates was produced and shipped for consumption in the United States in the third quarter of 2018, an increase of 5 percent compared with that of the third quarter of 2017. The estimated production for consumption in the first nine months was 1.77 billion metric tons (Gt), an increase of 5 percent compared with the prior-year period, according to Jason Willett, crushed stone commodity specialist for the U.S. Geological Survey (USGS).
The estimated production for consumption of construction aggregates in the third quarter increased in all nine geographic divisions compared with that sold or used in the third quarter of 2017.
The five leading states were, in descending order of production for consumption, Texas, California, Pennsylvania, Ohio and Minnesota. Their combined total production for consumption in the first nine months of 2018 was 497 Mt, an increase of 6 percent compared with the prior-year period.
An estimated 405 Mt of crushed stone was produced and shipped for consumption in the United States in the third quarter of 2018, an increase of 4 percent compared with that of the third quarter of 2017. The estimated production for consumption in the first nine months of 2018 was 1.05 Gt, an increase of 3 percent compared with the prior-year period.
The estimated production for consumption of crushed stone in the third quarter of 2018 increased in six of the nine geographic divisions compared with that sold or used in the third quarter of 2017.
The five leading states were, in descending order of production for consumption, Texas, Pennsylvania, Florida, Ohio and Illinois. Their combined total production for consumption in the first nine months of 2018 was 337 Mt, an increase of 4 percent compared with that of the same period of 2017 and represented 32 percent of the U.S. total.
The estimated U.S. output of construction sand and gravel produced and shipped for consumption in the third quarter of 2018 was 289 Mt, an increase of 8 percent compared with the prior-year period. The estimated production for consumption in the first nine months of 2018 was 720 Mt, an increase of 7 percent compared with that of the same period of 2017.
The estimated production for consumption of construction sand and gravel in the third quarter increased in all nine geographic divisions compared with that sold or used in the third quarter of 2017.
The five leading states were, in descending order of production for consumption, California, Texas, Minnesota, Michigan and Arizona. Their combined total production for consumption in the first nine months of 2018 was 269 Mt, an increase of 14 percent compared with that of the same period of 2017 and represented 37 percent of the U.S. total.
Portland (including blended) cement consumption increased by 4 percent in the third quarter of 2018 compared with that of the third quarter of 2017. Consumption in the first nine months of 2017 increased by 3 percent compared to 2017.
The U.S. Census Bureau reported that construction spending during October 2018 – the most current available at press time – was estimated at a seasonally adjusted annual rate of $1,308.8 billion, 0.1 percent (±1.5 percent) below the revised September estimate of $1,310.8 billion. The October figure is 4.9 percent (±1.6 percent) above the October 2017 estimate of $1,247.5 billion.
During the first 10 months of 2018, construction spending amounted to $1,096.4 billion, 5.1 percent (±1.2percent) above the $1,043.6 billion for the same period in 2017.
In October, the estimated seasonally adjusted annual rate of public construction spending was $310.2 billion, 0.8 percent (±2.6 percent) above the revised September estimate of $307.8 billion. Educational construction was at a seasonally adjusted annual rate of $76.9 billion, 2.6 percent (±2.3 percent) above the revised September estimate of $75.0 billion.
Highway construction was at a seasonally adjusted annual rate of $94.6 billion, 0.1 percent (±6.9 percent) below the revised September estimate of $94.6 billion.
Spending on private construction was at a seasonally adjusted annual rate of $998.7 billion, 0.4 percent (±0.8 percent) below the revised September estimate of $1,003.0 billion.
- Residential construction was at a seasonally adjusted annual rate of $539.0 billion in October, 0.5 percent (±1.3 percent) below the revised September estimate of $541.7 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $459.7 billion in October, 0.3 percent (±0.8 percent) below the revised September estimate of $461.3 billion.
“Although most segments of construction continue to post year-over-year spending gains, investment in vitally needed infrastructure has stalled or shrunk in the past four months,” said Ken Simonson, the chief economist for the Associated General Contractors of America. “If infrastructure contractors start losing employees to more-active construction segments, it may be hard to get infrastructure projects done on time once funding resumes.”
The economist noted that public spending was boosted by large increases in educational spending and other public building segments, while all public infrastructure categories had declined from recent highs. Seasonally adjusted spending on highway and street construction peaked in August and has dropped 2.1 percent in the past two months, he said. Public investment in air, rail and water transportation facilities fell 1.2 percent between August and October. Outlays for sewage and waste disposal and water supply systems topped out in June and have decreased 2.2 percent and 8.6 percent, respectively, since then. Public spending on conservation and development, such as levees and dams, slumped 14.6 percent from August to October.
Association officials said that now is the ideal time to invest in repairing, modernizing and expanding infrastructure. Stephen E. Sandherr, the association’s chief executive officer, called on federal officials to act quickly to enact legislation that would increase funding and speed the approval process to improve highways and other modes of transportation, enhance water safety and supply, and strengthen critical levees and dams.
“Infrastructure is vital to all Americans and is a subject both parties should be able to agree on funding and improving,” Sandherr said. “The incoming Congress has an opportunity to create a bipartisan infrastructure bill that will benefit all regions and all parts of the economy.”
New construction starts in October climbed 21 percent to a seasonally adjusted annual rate of $864.0 billion, according to Dodge Data & Analytics. The substantial increase followed three straight months of decline, during which the pace of total construction starts fell 22 percent from the exceptionally strong volume reported back in June.
Highway and bridge construction starts climbed 26 percent
Nonresidential building in October 2018 surged 53 percent, as several very large projects lifted the manufacturing plant, office building, and transportation terminal categories. Nonbuilding construction in October advanced 14 percent, supported by growth for public works while the electric utility/gas plant category bounced back from depressed activity in September.
Residential building in October 2018 edged up a slight 2 percent, helped by improvement for multifamily housing. During the first ten months of 2018, total construction starts on an unadjusted basis were $679.1 billion, up 1 percent from the same period a year ago. The year-to-date gain for total construction starts was restrained by a 45 percent slide for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first 10 months of 2018 would be up 3 percent relative to the same period a year ago.
“During 2018, the presence of very large projects in a given month has played a considerable role in shaping the monthly pattern of activity, and in October it was nonresidential building that especially benefitted from the start of very large projects,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “These included a $2.4 billion petrochemical plant in Texas, the $1.4 billion Terminal One building at Newark Liberty International Airport, the $860 million expansion to the Las Vegas Convention Center, a $750 million Facebook data center in Utah and a $655 million concourse expansion at Denver International Airport that’s part of that facility’s extensive upgrade. Earlier, decreasing construction starts for nonresidential building during this year’s third quarter raised some concern, suggesting that this sector may have already peaked and is now in decline. The strong October performance indicates that nonresidential building construction starts continue to proceed at an elevated pace, at least for the present.”
Murray continued, “The current year has also witnessed moderate growth for public works construction, helped by the greater federal funding for fiscal 2018 passed by Congress back in March as part of the omnibus appropriations legislation. For fiscal 2019, which began on October 1, the federal-aid highway program and EPA construction-related programs are operating under a continuing resolution through December 7, waiting for Congress to finalize spending levels. As for residential building, multifamily housing has shown renewed expansion this year after settling back in 2017, yet a more cautious lending stance by banks towards multifamily development may dampen multifamily construction starts next year.”
Nonbuilding construction in October 2018 was $184.0 billion (annual rate), up 14 percent following September’s 13 percent decline. The electric utility/gas plant category increased 187 percent relative to a very weak September, although October’s volume was still 32 percent less than the average monthly pace reported during 2017. Large electric utility projects that reached groundbreaking in October were a $334 million wind farm in Kansas and a $300 million wind farm in Minnesota.
The public works categories as a group rose 6 percent in October 2018, with a varied performance by individual category. Highway and bridge construction starts climbed 26 percent, with October 2018 coming in as the highest seasonally adjusted monthly amount so far for 2018.
Large highway and bridge projects in October 2018 were led by the $1.3 billion U.S. portion of the Gordie Howe International Bridge (estimated at $2.6 billion in U.S. dollars for the entire bridge), connecting Detroit and Windsor, Ontario.
Other large highway and bridge projects in October 2018 were the $802 million I-395 project in Miami and the $673 million I-10 Corridor project in San Bernardino, Calif.
The top five states ranked by the dollar amount of highway and bridge construction starts in October were – Texas, Michigan, Florida, California and Pennsylvania.
River/harbor development in October 2018 advanced 114 percent, reflecting a $210 million harbor dredging project in Jacksonville, Fla. Water supply construction grew 30 percent in October, boosted by a $121 million water supply conduit project in Burbank, Calif.
The miscellaneous public works category pulled back 33 percent in October from its heightened September pace, which included the $1.4 billion Arbuckle II natural gas pipeline in Texas and Oklahoma, as well as the $1.1 billion Cactus II oil pipeline in Texas.
The October data did include the start of one major pipeline project – the $2.0 billion Gray Oak oil pipeline that will transport crude oil from the Permian Basin to the Corpus Christi, Texas, area.
Through the first 10 months of 2018, pipeline construction starts totaled $19.3 billion, down only 8 percent from the robust amount during the same period of 2017. Sewer construction also retreated in October, falling 40 percent.
Momentum Going Forward
The Dodge Momentum Index moved 5.3 percent higher in November to 159.7 (2000=100) from the revised October reading of 151.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
November’s gain was due to a 9.4 percent rebound for the commercial component of the Momentum Index. The recent setbacks in the overall Momentum Index were the result of declines in planning for commercial buildings, and while such planning did rebound in November, the level remains below what was reported in late spring and early summer. This is consistent with the view that the commercial building sector may now be nearing a peak.
Meanwhile, the institutional component of the Momentum Index eased back 0.6 percent in November. Plans for institutional building projects have remained generally stable during 2018, reflecting the influence of public funding as it relates to such projects as schools and transportation terminals.
In November, 13 projects each with a value of $100 million or more entered planning. The two leading commercial projects were a $350 million hotel in Indianapolis and a $300 million office building in Chicago. The two leading institutional projects were a $320 million high school in Chino, Calif., and a $240 million research laboratory in Long Island City, N.Y.
Homes Sweet Homes
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the new residential construction statistics for October 2018:
Building Permits – Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,263,000. This is 0.6 percent (±2.4 percent) below the revised September rate of 1,270,000 and is 6.0 percent (±1.6 percent) below the October 2017 rate of 1,343,000. Single-family authorizations in October were at a rate of 849,000; this is 0.6 percent (±2.2 percent) below the revised September figure of 854,000. Authorizations of units in buildings with five units or more were at a rate of 376,000 in October.
Housing Starts – Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,228,000. This is 1.5 percent (±12.9 percent) above the revised September estimate of 1,210,000, but is 2.9 percent (±10.4 percent) below the October 2017 rate of 1,265,000. Single-family housing starts in October were at a rate of 865,000; this is 1.8 percent (±10.8 percent) below the revised September figure of 881,000. The October rate for units in buildings with five units or more was 343,000.
Housing Completions – Privately-owned housing completions in October were at a seasonally adjusted annual rate of 1,111,000. This is 3.3 percent (±10.5 percent) below the revised September estimate of 1,149,000 and is 6.5 percent (±9.2 percent) below the October 2017 rate of 1,188,000. Single-family housing completions in October were at a rate of 832,000; this is 1.2 percent (±10.6 percent) below the revised September rate of 842,000. The October rate for units in buildings with five units or more was 269,000.
Sales of newly built, single-family homes fell to a seasonally adjusted annual rate of 544,000 units in October after an upwardly revised September report, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. This is the lowest sales pace since December 2016. However, on a year-to-date basis, sales are up 2.8 percent from this time in 2017.
“The November reading is consistent with reports from our builders, who say that the job market and demographic tailwinds bode well for housing demand but rising interest rates and home prices are forcing customers to take a pause,” said Randy Noel, chairman of the National Association of Home Builders (NAHB) and a custom home builder from LaPlace, La.
“Policymakers should see this drop in sales as an indicator that housing affordability will continue to slow down the market.”
“Home sales declined this month as housing affordability continues to be a hurdle for consumers,” said NAHB Senior Economist Danushka Nanayakkara-Skillington. “While a solid economy and positive demographics support future demand for housing, it is critical to address this mounting affordability crisis.”
A new home sale occurs when a sales contract is signed or a deposit is accepted. The home can be in any stage of construction: not yet started, under construction or completed. In addition to adjusting for seasonal effects, the October reading of 544,000 units is the number of homes that would sell if this pace continued for the next 12 months.
The inventory of new homes for sale rose to 336,000 in October. The median sales price fell 3.6 percent to $309,700, as the market is shifting to townhomes and other lower-cost houses.
Looking at the regional numbers on a year-to-date basis, new home sales rose 6.3 percent in the Midwest, 4.1 percent in the West, and 3.8 percent in the South. Home sales fell 17.1percent in the Northeast year-to-date.
It takes 400 tons of aggregates to construct the average modern home, according to the National Stone, Sand and Gravel Association.