February Construction Contracts Advanced 1%
Greater contracting was reported for non-residential building and public works, outweighing a moderate decline for single-family housing.
February's data lifted the Dodge Index to 154 (1996=100), slightly above a revised 153 for January. The Dodge Index had settled back to 146 at the close of 2001, after reaching a peak of 155 earlier in the year.
"The improved contracting in January and February gets 2002 off to a good start, and shows that construction remains at least for now one of the more resilient sectors of the economy," stated Robert A. Murray, vice president of economic affairs for Dodge.
Nonresidential building in February grew 5 percent to $169.8 billion. "It's true that commercial building continues to be weak by the standards of 1999 and 2000, and a sustained upturn for these structure types is at least several quarters away," stated Murray. "Still, the improved performance in February does suggest that much of the correction for commercial building has already taken place, and the next few months will see an up-and-down pattern more consistent with a market that is beginning to stabilize."
Residential building in February fell 6 percent to $233.8 billion. Single-family housing was down 9 percent after a brisk January, although February's level remained 6 percent above the average monthly pace in 2001. The residential slippage in February was eased by a 16 percent pickup for multifamily housing.
"Single family housing has been a mainstay for the construction industry over the past year, and the weaker employment picture in recent months may prove to be a near term negative for housing demand," stated Murray. "Still, with the 30-year fixed mortgage rate holding at about 7 percent, the cost of financing continues to be supportive, which should help cushion any near term loss of momentum for the single-family market."
Four of the five major regions showed reduced residential building in February - the South Atlantic, down 3 percent; the South Central, down 4 percent; the Midwest, down 15 percent; and the Northeast, down 18 percent. The West was the only region to post a residential increase in February, rising 5 percent.