Data released recently by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development indicate that new residential construction conditions are destabilizing again after a brief period of improvement in November and December 2009.
According to the January 2010 New Residential Construction Report, housing permitting activity has declined across the board. Permits for privately owned housing units slipped 4.9 percent to a seasonally adjusted annual rate of 621,000, down from December 2009’s revised rate of 653,000. Single-family permits inched 0.4 percent above December’s rate of 505,000 to 507,000, while permits for units in buildings of five or more units fell 26.2 percent to 96,000.
Housing starts for January were an equally mixed bag, with overall starts of privately owned housing units rising 2.8 percent above December’s revised rate of 575,000 to a seasonally adjusted annual rate of 591,000. Starts of single-family units increased 1.5 percent to a rate of 484,000, but starts of units in buildings with five or more units jumped 17.6 percent in January, marking a three-month period of consistent increases. January’s housing completions, however, declined 12.9 percent to a rate of 427,000 for single-family and 11.2 percent to a rate of 215,000 for units in buildings of five or more units.
The American Institute of Architects’ (AIA) most recent Architecture Billings Index (ABI) also reflects housing’s peaks and valleys. The January ABI dropped three points from the previous month to a rating of 42.5. A score above 50 would indicate an increase in architecture billings and demand for design services. Inquiries for new projects dropped more than seven points in January, scoring 52.5.
“We’ve seen this sawtooth pattern now for the last six to eight months, not moving at any great speed toward a recovery in billings,” says AIA’s chief economist Kermit Baker, Ph.D, Hon. AIA. “It’s not as bad as it was during the depths of the downturn, but it’s also not moving very quickly toward anything that indicates a turnaround in design activity.”
While the AIA’s membership is largely non-residential, the organization does track residential activity, and Baker notes that the residential design sector has been one of the best performers. For two out of the past three months, residential activity—represented by the multifamily sector—has scored above 50 on the ABI, indicating some increase in billings.
“Residential architecture has the most optimistic outlook of any sector,” says Baker. “Scores are showing some encouraging signs in multifamily, and if our numbers reflected the full residential sector it might be even more encouraging.”
