August Wrap-Up Construction Insider: Builder confidence’s all-time high, increase in construction jobs & more

August Wrap-Up Construction Insider: Builder confidence’s all-time high, increase in construction jobs & more

Construction Insider is a monthly roundup of the latest news and insights in construction.

Builder confidence at an all-time high

Builder confidence for the newly-built single-family residential market soared to 78 points in August, matching the all-time high reading for the Housing Market Index (HMI). NAHB Now

  • The increase in builder confidence shows a positive outlook for the housing market as the demand for new single-family homes remains strong, said NAHB Chairman Chuck Fowke.
  • Single-family home construction benefits from low-interest rates and a noticeable shift from urban to rural markets. The single-family sector also remains a “bright spot” despite the pandemic, said NAHB Chief Economist Robert Dietz.
  • Meanwhile, lumber prices also continue to increase, which “could dampen momentum in the housing market this fall, despite historically low-interest rates,” added Fowke.

20,000 construction jobs opened in July

Construction employment improved by a net of 20,000 jobs in July, according to the Associated General Contractors of America (AGC). Electrical Contractor

  • Residential and specialty trade construction added 24,000 jobs while infrastructure and non-residential building construction lost a total of 4,000 jobs.
  • AGC officials warned about continuing losses in the infrastructure sector unless local and state budgets are augmented by the federal government.
  • “It is likely that many non-residential jobs are in jeopardy following the completion of emergency projects and ones begun before the pandemic,” said AGC chief economist Ken Simonson.
  • Projects that were initially scheduled to begin in the summer or later have been canceled by both private and public owners, added Simonson.

US hotel construction stays stable in first half of 2020

Despite travel bans and the ongoing economic slowdown, construction of US hotels remained strong in the first half of 2020, according to Lodging Econometrics (LE). KHL

  • Contrary to what has happened to hotel operations, US hotel construction has been minimally affected by the pandemic.
  • There are currently 11,771 projects and 235,467 rooms under construction, showing a year-over-year increase of 3% and 1%, respectively.
  • The LE report states that the construction pipeline remains robust with 5,582 projects and 687,801 rooms at the end of the second quarter of 2020.
  • Hotel developers who are set to start construction in the next 12 months continue to monitor current events and are prepared to make adjustments to their construction schedule, according to the LE report.

Demand for vacation homes rise amid pandemic

Second and vacation home developers, including Stock Development, are experiencing a surge in demand as the economy slowly re-opens. Builder

  • Developers like Stock suffered a steep dip in sales when the shutdowns were implemented in March but were able to recover by late May.
  • The increase in luxury home sales shows an attitude shift for high-end buyers who were able to survive through the initial anxiety and uncertainty of the pandemic.
  • “People are making that decision based on possibly not traveling…overseas for an extended period,” said Michael Ziman of Ziman Development.
  • Tim Naughton of Evergreene Homes attributes the high demand in second homes to the recovery of the stock market. “As everybody’s portfolios came back, they got more comfortable with looking at a second home again,” said Naughton.

Homebuilders group calls on Trump to stop lumber price surge

The National Association of Home Builders (NAHB) has called on President Donald Trump to take action and halt the continuing surge in lumber prices, which had risen by 80% since April. ENR

  • In an August 7 letter to Trump, NAHB President Gerald M. Howard asked Trump to work toward a new trade agreement with Canada that would end current tariffs on lumber imports.
  • Additionally, Howard also wanted Trump to urge lumber companies to produce more lumber in order to slow down the price increase.
  • Imports of softwood lumber from Canada summed up to $4.2 billion in 2019, according to data from the US Commerce Department.

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