Housing Market Responds to Lower Rates – Pittsburgh Construction Market Awards

Recent reports on sales of existing homes and new construction show that buyers are motivated by the lower long term interest rates that inspired the two Fed Funds cuts this summer. August’s construction numbers were strong for multi-family and single-family construction. The rate environment seems unlikely to have made such a difference. Rates were already historically low. However, one of the major home buying demographic groups – Millennials – has proven to be very skeptical about home ownership; therefore, even small drops in the 30-year mortgage rate seem to be having the emotional impact that pushes shoppers to become buyers.

Wells Fargo Economics has a great short commentary on residential construction. An excerpt is below:

Higher builder confidence and an improving trend in single-family permits
indicate that new home construction is finally beginning to catch up to the higher pace seen in new home sales. Total housing starts jumped 12.3% to a 1.36 million-unit pace, the highest since June 2007. The headline number surpassed all expectations, but was driven to a large extent by a 32.8% surge in multifamily starts. New apartment construction, which is notoriously volatile on a month-to-monthbasis, had briefly dipped below trend the past two months, so a catchup in August is not surprising.
Still, single-family starts were quite solid, rising 4.4% to a 919,000-unit pace,
the highest since January 2019. Only three times in this long and gradual
housing recovery have we seen single-family construction at a higher pace
than in August. Single-family starts rose 3.6% and 5.3%, respectively, in the
South and West, the two largest regions for residential construction. They
were up 8.7% in the Midwest and down 1.7% in the Northeast. Nationwide,
year-to-date single-family starts are down 2.7% over the same period last
year.

In regional nonresidential construction news, decisions were made on several large projects that had been pending. The Gilbane/Massaro joint venture was chosen for the combined $200 million central utility plant/Human Performance Center at the University of Pittsburgh Victory Heights. Rycon Construction was awarded the $40 million UPMC Magee central utility plant/maintenance building. Rycon was also successful on the 200,000 square foot Phillips buildout at Bakery Square. Thomas Construction is starting construction on the $11.3 million Hoyt Science Center expansion at Westminster College.
CM proposals are being taken from Landau, TEDCO, Volpatt and Whiting-Turner on the $3.5 million CMU Mellon Institute Group 1920 lab renovations. Highmark is taking proposals from AECOM/Tishman, Mascaro, Massaro, PJ Dick, Rycon, Turner and Whiting-Turner on its $20 million lobby and exterior upgrade.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s