The construction industry is experiencing some bumps in its recovery but is generally on a modest upward trajectory. The total value of construction for the first six months of this year is $387.1 billion, 9.0% above the same period in 2011, according to the latest construction cost report from property and construction consultant Rider Levett Bucknall. The research also suggests that from April to July of this year, the national average increase in construction cost was only 0.22%.
Several of the 12 U.S. cities where RLB tracks construction costs experienced little change in the quarter. For the fifth consecutive quarter, all locations posted positive inflation for the period with Honolulu experiencing the greatest increase at 0.89% followed by more modest gains in Denver, Las Vegas and Phoenix.
According to Rider Levett Bucknall President Julian Anderson, “The construction industry’s recovery is continuing, albeit at a
disappointingly slow pace. The good news is that inflation remains muted.”
RLB reports housing starts advanced for the fourth month in a row. Home builders are increasingly confident that the single-family housing market is improving with July HAHB/Wells Fargo Housing Market Index (HMI) jumping six points to 35, its highest reading since March 2007.
RLB’s outlook for multifamily construction looks bright for the near term with the second quarter vacancy rate falling to the lowest rate since second quarter 2002.
Unfortunately, improvement in the housing sectors are somewhat tempered with the news that the American Institute of Architects’ Architectural Billings Index—a measure of future non- residential spending activity nine to 12 months out—remains below 50, indicating decreased billings, which may impact the pace of the much-needed overall improvement within the construction industry.