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).