IronPlanet Blog

New home construction hits unexpected stumbling block

Posted by IronPlanet on Apr 17, 2012 9:44:00 AM

Although recent months have shown a surge in new housing starts, the Commerce Department's recent report for March indicates that construction on new homes has fallen off considerably, reports Bloomberg.

Analysts surveyed by Bloomberg before the report came out predicted approximately 705,000 new homes beginning construction in March on average. The most pessimistic estimate was 670,000 housing starts. In reality, the report says just 654,000 projects began in March, the lowest since October. That figure represents a 5.8 percent decrease from the previous month.

Some analysts are suggesting that the high numbers in January and February were largely due to the mild winter. Construction projects that may have otherwise began in the spring instead started in January and February. Rather than the somewhat even numbers that would have been displayed otherwise, January and February were frontloaded with projects and now March and April may have fewer.

"Housing continues to bump along the bottom," Jacob Oubina, a senior U.S. economist at RBC Capital Markets, told the news source. "The best we can hope from housing over the next couple years is that it won’t subtract from growth. The numbers in the past few months were decidedly impacted by a much milder winter, so a significant portion of construction was pulled forward."

It wasn't all bad news, however, as other figures show that the future could be somewhat better. Building permits granted rose 4.5 percent to 747,000, the highest since September 2008. Application for multifamily units also rose 21 percent. Both measurements are seen as good predictors of future projects.

Construction companies hoping for better days ahead need to ensure that they have the right construction equipment to get the job done when the time comes. The auction site IronPlanet offers a wide array of cranes, backhoes and other used construction equipment, often at a more affordable price than buying new.

Topics: Construction, Industry Headlines

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