Two favorable indicators for near-term construction activity came out yesterday and today. Today, Kermit Baker, Chief Economist for the American Institute of Architects, wrote, “firms reported strong gains nationally last month as the nonresidential construction expansion continued to pick up steam. There are no signs of a slowdown on the horizon. New project inquiries also increased in July. All told, it is shaping up to be a strong fall for design firms…in all regions…” (www.aia.org/aiarchitect/thisweek05/tw0826/tw0826otb.cfm) Yesterday, McGraw-Hill Construction reported, “The value of new construction starts increased 1% in July [seasonally adjusted]. Nonresidential building maintained its improving trend of recent months….Residential building continued to see robust activity, while nonbuilding construction settled back slightly from an elevated June. For the first seven months of 2005, total construction [contract values were] 6% above the corresponding period of 2004,” with residential building up 10%, nonbuilding up 7%, and nonresidential building down 5%.

Mixed reports surfaced this week about home sales. On Wednesday, the government reported that sales of new single-family houses in July rose 6.5% at a seasonally adjusted annual rate from June, and 28% from July 2004. The year-to-date total was 8.4% higher than in January-July 2004. The number of unsold new houses at the end of July was 4.0 times the number sold during the month, and the median sales price of $203,800 was down 4% from July 2004; the inventory/sales ratio and median price were the lowest in more than a year. (The median is the price above which half the sales occurred.) In contrast, the National Assn. of Realtors reported on Tuesday that sales of existing houses (including condominiums and cooperatives) in July slipped 2.6% at a seasonally adjusted annual rate from the record set in June, although sales were 4.7% higher than in July 2004. Inventories increased 2.6% to a 4.6-month supply at current selling rates, and the median price jumped 14% from July 2004. The sales drop was most pronounced for condos and coops: -5% from June.