Builder blog

Current events and commentary regarding the construction industry. Opinions are my own.
Justin Reginato, Ph.D.
  • About
  • Builder Blog
  • Tacos & Tower Cranes
  • In the News
  • For CM Students

Good News, Possible Bad News on the Construction Front

2/25/2013

4 Comments

 
Wow, it's been a few weeks since I last posted, so there's a lot to get caught up on.  Some of this news is a bit stale, so I'll keep it brief.

First, the sort of bad news:  After going on a tear over 2012, the National Association of Homebuilders Housing Market Index (HMI) declined in February from 47 to 46.  Any HMI less than 50 indicated that homebuilders see sales conditions for houses as poor (conversely, an HMI greater than 50 means the sales climate is good in the eyes of homebuilders).  As I have said in the past, I'm not entirely interested in homebuilding as a sector of the construction industry, but it is a leading indicator for other types of construction (commercial, industrial, infrastructure, etc.).  While a decrease is not good, it needs to be put in perspective:  the HMI and number of housing starts increased crazily in 2012 (HMI in particular).  It's not uncommon for markets to take a break.  Let's wait to see if an actual downward trend emerges before hitting the panic button.

More recently, it was reported that the price of lumber dipped slightly recently (it's around $400 per 1,000 board feet).  Again, it has been going up over 2012 and this may just be a reaction to the small decline in HMI. A few months of data is still needed to see if this trend has staying power or if prices will start rising again.  You can see how the price of lumber has changed over time here.

The decline in prices may actually prompt corporations to start investing, and a recent headlines seem to indicate that's the case.  Corporate capital spending plans have exceeded that predicted by Wall Street and have held up lately.  The corporate spending on capital expenditures, or capex, includes offices, plants and machinery.  This is the sector of the construction economy I am interested in because it's the one that hires the contractors most of the students that graduate with a Construction Management degree from Sac State will work for.  Capex spending  for 2013 is predicted to be the highest it's been in over the past four years.  That's good news if it holds up, which leads me to...

Any recovery, new or continued, is a function of sidestepping any issues tied to the sequestration.  Hopefully our government will find some sort of palatable compromise so that we don't shoot our recovery in the foot.
4 Comments
Lipozene link
10/17/2013 07:40:17 pm

I am going to subscribe, so I can learn more. I can't wait to receive updates through e-mail.

Reply
Lipozene link
10/17/2013 11:40:35 pm

thanks ..i have bookmarked it already

Reply
Lipozene link
10/23/2013 04:30:37 pm

This blog post really grabbed my attention. With that said I am going to subscribe. Therefore I will get more updates on what you have to say. Please keep writing as I want to learn more.

Reply
Lipozene Review link
10/29/2013 02:48:47 am

I like the cut of your job :) or at least your thought process but sorry to say, I honestly think you would have fully sold me on the idea had you been able to back up your premis with a substantial bit more solid facts.

Reply



Leave a Reply.

    Archives

    November 2022
    October 2022
    September 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    September 2019
    August 2019
    September 2018
    June 2018
    April 2018
    March 2018
    February 2018
    January 2018
    March 2016
    February 2016
    January 2016
    November 2015
    February 2015
    December 2014
    November 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    July 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    July 2012
    May 2012
    April 2012
    February 2012

    Categories

    All
    Economics
    Real Estate
    Technology

    RSS Feed

Powered by Create your own unique website with customizable templates.
  • About
  • Builder Blog
  • Tacos & Tower Cranes
  • In the News
  • For CM Students