The combination of an unsettled economy and high interest rates is causing investors and property owners to take a closer look at their plans for construction projects, according to AIA Chief Economist Kermit Baker.
Builder sentiment has been edging higher in the early part of 2023 as a significant amount of housing demand exists on the sidelines and resale inventory is limited.
Although high construction costs and elevated interest rates continue to hamper housing affordability, builders expressed cautious optimism in March as a lack of existing inventory is shifting demand to the new home market.
Commercial and institutional planning show improvements over the month, according to Sarah Martin, associate director of forecasting for Dodge Construction Network.
Single-family housing starts posted a double-digit percentage gain in December, but production is running well below a rate of 1 million units annually, indicating ongoing weakness in the housing market as high construction costs and elevated interest rates continue to present affordability challenges.
While new home sales received a slight bounce in November from moderating mortgage rates, the housing market continues to struggle because of ongoing supply chain disruptions, elevated construction costs and challenging affordability conditions.
Pending home sales slid for the fifth consecutive month in October, according to the National Association of Realtors. Three of four U.S. regions recorded month-over-month decreases, and all four regions recorded year-over-year declines in transactions.
A measure of construction contractors’ bid prices moved sharply higher in October as firms coped with ongoing supply-chain challenges and a tight labor market, according to an analysis by the Associated General Contractors of America of government data.
The prospects for continued high levels of multifamily development declined significantly in the third quarter, as did the prospects for continued high occupancy rates, according to results from the Multifamily Market Survey (MMS) released by NAHB.
