Congress approves selective construction funding increases; home sales stay high
State-funded construction funding may also fare well in 2005. The Rockefeller Institute of Government (www.rockinst.org) reported on November 10 that state sales, personal income and corporate income taxes grew more than 8% from July-September 2003 to the same quarter of 2004. That marked the fourth straight quarter of year-over-year revenue gains above 7%. As a result, legislatures meeting in January should have more revenue than in the past three years to restore or increase construction and other spending.
Single-family home sales remained strong in October. The government reported on Wednesday that new-home sales were at a seasonally adjusted annual rate of 1,226,000, 0.2% above the September rate and 7% above the October 2003 level. For the first 10 months of 2004, sales were 10% higher than in the same period of 2003, with increases by region ranging from 4% in the Northeast to 8% in the Midwest and South to 16% in the West. The median sale price of new homes in October was $221,800, up 14% from a year earlier. There was a 4.1 months' supply of unsold houses at the current sales pace. The National Assn. of Realtors reported on Tuesday that existing-home sales “held steady, setting a pace that was the fourth-highest on record.” The 6,750,000 seasonally adjusted annual rate was 6% higher than in October 2003. The median sales price for existing homes was $187,000, up 9% from a year earlier. There was 4.3 months' supply of unsold homes. Sales are likely to continue at a high level in November. Freddie Mac reported on Wednesday that the interest rate for new 30-year fixed mortgages averaged 5.72% last week, the same as in October.
Durable-goods orders (excluding semiconductor manufacturing) slipped 0.4% in October, seasonally adjusted, the Census Bureau reported on Wednesday. That followed a revised 0.9% increase in September (initially estimated as +0.2%). Year-to-date orders were 11% higher than in the first 10 months of 2003.
“U.S. employers' health-care costs rose 7.5% in 2004, much less than anticipated, and are likely to slow even more next year, a new nationwide survey [by Mercer Human Resource Consulting] shows,” the Wall Street Journal reported on November 22. “The increase is the smallest in five years after several years of double-digit increases. Mercer's survey, of more than 3,000 employers, is the largest of its kind and typically offers the final and most comprehensive picture of employer medical-cost trends in a given year….Next year, employers predict the average health-benefit cost per employee will rise 6.6%.” A slowdown is likely to be reflected, after a lag, in slower growth in health-care construction, which has been the fastest-rising segment of private nonresidential construction.
The Bureau of Labor Statistics released its annual estimate of employment and wages by industry on November 24 and by occupation on November 12 (www.bls.gov/oes). There were 6,777,000 employees in the construction industry in 2003, with an annual average wage of $40,000, spread among more than 300 occupations. The most common occupation was carpenters (716,000 employees, average wage $38,240), followed by construction laborers (696,000, $29,620), electricians (415,000, $44,000), and first-line supervisors/managers (395,000, $53,150). Construction data are available by occupation for each state and many metropolitan areas, as well.