In a recent e-mail, MHC Vice President for
Economic Affairs Robert Murray wrote, “Preliminary June McGraw-Hill construction
starts reveal the following comparisons for the January-June period of 2007-nonresidential
building is unchanged from a year ago, while the combination of nonresidential
building, public works and electric utilities is up 2%.” The stark difference
from Reed’s nonresidential estimates (22% for building, 20% for the total) is
attributable in part to using different dates for recording the start of
projects or different timing for revisions. Louis Centorcelli, Reed’s Director
of Business Development-Market Analytics, wrote in an email today, “this
results in a very consistent pattern of revisions over time-the Reed data tends
to overstate the market and the MHC data tends to understate the market. Using the publicly available press releases
issued by MHC every month, I have calculated the current YTD (thru May) MHC revisions
history for 2006 to be +11%; the same Reed data is running at a revision rate
of -11%....When one looks at the 12-month
moving totals [for nonresidential building starts], the Reed data shows an
increase of 10% for the 12 months ending May 2007 versus the same period a year
ago,” whereas Murray estimated the change as 5%, a much smaller difference between Reed and MHC than in the
five-month YTD comparisons. Murray said the combination of nonresidential
building, public works and electric utilities was up 8% on a 12-month basis.
Most respondents
to a question accompanying the last two Data DIGests indicated that residential activity remains very weak,
while nonresidential activity is
strong and perhaps getting more so. D.R. Horton, the largest homebuilder by number of
closings, reported a 40% drop in net houses
sold in April-June 2007 compared to April-June 2006. The cancellation rate
(sales orders canceled divided by gross sales orders) for the quarter was 38%.
These figures are worse than the recent drops in sales reported by Census (new
homes) or the National Association of Realtors (existing homes).