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"The shortage of construction workers and the increasing costs of materials have caused developers to push the timelines for many of their projects back a quarter or two," apartment data-tracking firm Axiometrics reported on Wednesday. "That trend is continuing, according to pipeline data. Late last year, the cyclical peak for new supply was going to be in the second quarter of 2017. That peak moved to the third quarter early this year. It's still there, as of May 22, but further delays of about 3,500 units would slide the peak back to the fourth quarter of 2017....25,137 fewer units were delivered in the first quarter of 2017 than were expected at the start of the year. Second-quarter deliveries are down by 19,663 with just more than one month still remaining. Meanwhile, supply identified for third-quarter completion has increased by 39,108 and fourth-quarter supply is up by a whopping 43,645. So much for the slowdown in apartment construction starting this year, which is expected to end with 395,626 new units having come to market—38.3% more than were delivered in 2016."
Data-tracking consultancy Lodging Econometrics reported on May 10 that the first-quarter 2017 hotel construction "pipeline currently stands at 5,032 projects..., up 13% by projects year-over-year....There are 1,511 projects...under construction, up by 155 projects [year-over-year] or 11%. Projects scheduled to start in the next 12 months, at 2,414 projects..., were up 367 projects, 18%. Projects in early planning at 1,107 projects...were up by 39 projects or 4%. This is the 21st consecutive quarter of growth, but the pipeline is still a distant 851 projects...away from the  peak of 5,883 projects....This moderate pipeline growth can be attributed to the tightening of loan availability, the recent rise of interest rates with the expectation of more increases on the horizon and a slowing economy near full employment."
"Contractors, labor representatives and owner-clients in the union construction and maintenance industry report an increasing pervasiveness in union craft labor shortages," according to the 2017 Union Craft Labor Supply Survey report, released on May 9 by The Association of Union Constructors (TAUC). Of the 791 respondents, drawn equally from management and union representatives, 57% said they had experienced a union craft labor shortage in 2016, vs. 52% each in 2015 and 2014. The remaining 43% of respondents said that their union workforce had the appropriate number or a surplus of workers. "Union/labor respondents reported the lowest shortage rates (48%) and the highest surplus rates (18%). Construction managers reported the highest shortage rates (70%). The evident disparity between labor and management, while still significant (22%), has shrunk from last year's report (34%)." Of six sectors, "the manufacturing sector reported the largest shortage of union craft labor at 64% and the commercial/institutional and petroleum/natural gas/chemical sectors reported the 'best' union labor supply...65% of respondents [vs. 55% in 2015] said they experienced a shortage of carpenters & millwrights in 2016, the highest of the 14 building trades; they were followed by boilermakers (56% reported a shortage), electricians (54%) and iron workers (52%)." Among nine regions, reported shortages ranged from 78% of respondents in the Mountain Northern Plains to 54% in the Middle Atlantic. "The most highly demanded skill, by far, was welding, which was identified four times more often than the next highest skill."
"After beginning the year with a marginal decline, the ABI [Architecture Billings Index] has posted three consecutive months of growth in design revenue at architecture firms," the American Institute of Architects (AIA) reported on Wednesday. The April ABI score was 50.9, down 54.3 in March. "This score still reflects an increase in design services," because the ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings, and any score over 50 indicates billings growth. AIA says the index "reflects the approximate 9-to-12 month lead time between architecture billings and construction spending." The scores for the four practice specialties were mixed (based on three-month moving averages): institutional, 54.0, up from 52.6 in March; mixed practice, 53.4, down slightly from 53.5; commercial/industrial, 52.4, up from 50.3; and residential (mainly multifamily), 49.9, down from 51.5.
Consultancy IHS Markit and the Procurement Executives Group (PEG) reported on Wednesday, "Construction costs rose for the seventh consecutive month in May...The materials/equipment price index came in at 55.2, almost five points lower than in April, which was one of the highest figures recorded in the survey's history. Seven of the 12 categories tracked in the materials sub-index showed rising prices; five categories registered flat pricing...While the copper-based wire and cable price index hit the neutral point in May, steel prices remained elevated despite some give-back. 'Steel prices peaked in April and are now beginning to weaken. Price drops will continue through at least the third quarter, more likely until the end of the year,' said John Anton, senior principal economist at IHS Markit. 'Upside risk comes from the "Buy American" proposal for pipelines, which is causing concern among energy buyers and plate consumers. If the proposal is enacted in its strongest form, there could be shortages in supply and allocation.' The current subcontractor labor index rose slightly above the neutral mark at 51.3."
The U.S. Census Bureau released population growth estimates for cities on Thursday. Phoenix added the most residents (32,113) for July 1, 2015-July 1, 2016. Among cities with at least 50,000 residents in 2015, four of the top five in percentage growth were in Texas, led by Conroe (7.8%), near Houston. Population growth is an important determinant of demand for many types of construction and may also indicate where local governments are receiving additional revenue to fund construction.
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