[VIDEO] Continued Home Sales Slump Surprises Economists in January

New home sales were the lowest since August of 2017 and had a drop of 7.8% from December; plus more construction industry news on the March 8, 2018, Construction News Tracker

Construction News Tracker is presented by Caterpillar and produced by ForConstructionPros.com.

Potentially bad winter weather pushed down the sales of new homes in January for the second month in a row according to the Commerce Department. The latest analysis shows a seasonally adjusted rate of 593,000 sales the lowest since August of last year and a drop of 7.8% from December. Economists had expected a more robust showing for January following December's dismal showing, but apparently continued poor weather hampered that outlook. Breaking it into sectors, the northeast was off 33.3%, the south was down 14.2% while the midwest home sales rose 15.4% and the west rose 1%. The inventory of new homes rose to 301,000, according to the federal agency.

What could potentially set off a world trade war has been initiated by the Trump Administration with the imposition of new tariffs. The White House has announced that 25 % on steel and 10% on aluminum are to be imposed soon following a Commerce Department review claiming that such imports effect domestic production and pose national security interest threats.

Construction Likely 'Among Biggest Losers' in Trump’s Steel Trade War

Dodge Data reports the value of construction starts fell 2% between December and January to a seasonally adjusted rate of 725.9 billion. Comparing January 2017 to 2018, the rate fell 7%, an 18% drop in nonbuilding starts seen as a correction to last December's 45% category increase drove that decline. Overall starts in public works projects also took a tumble of 15% thought to be due to a major 34% drop in highway and bridge construction for the month. As a result, January's index was down to 154 on the Dodge Analytics report  a position analysists term "decelerating expansion".

Despite the expanding home building market contractors are facing higher operating costs. AGC Chief Economist Ken Simonson says he expected multifamily building contractors to see costs rise 4% to 5% this year for materials and services such as truck transportation, subcontractors and leasing. And, this doesn’t factor in projected cost increase for lumber and steel resulting from international trade disputes. The cost of lumber has increased by 25% from December alone, and IHC Market reports the materials price index posted a 57.4 figure for February which indicates rising prices in nine categories surveyed. Subcontractor labor costs rose from 50.3 in January to 62.2 in February across the nation. Construction unemployment was registered at 8.4% in January  the tightest since 2000.

A New York contractor facing bribery and bid rigging charges at trial this year has stopped operating as a general contractor. L.P. Ciminelli executives were charged in 2016 with trying to bribe New York state officials to win a  $750 million Tesla solar panel factory deal in Buffalo. Ciminelli, which appeared in Engineering News and Record's Top 400 firms in 2016, has lost an estimated $4 billion in contracts as a result of the state court charges, auctioned off equipment and tools, and downsized to 10% of its workforce.

The Great Lakes Commission which oversees water issues for eight states is mulling over a massive plan to upgrade wastewater treatment plants, storm water pipes and drinking water filtration systems. Along with it’s a hefty price tag of $271 billion, considering the recent water crisis in Flint, Michigan, and Toledo, Ohio, the commission says it must look into the aging and underfunded infrastructure and the drastic improvements needed. In a related story, a study of 17,900 community water systems nationwide claims some 21 million Americans are exposed to unsafe water that violates health based standards. Published in the National Academy of Science, the study claims most Americans water supply is quite good.

Balfour Beatty, Fluor, Flatiron and Dragadoes USA Construction companies are sharing a $1.95 billion contract to build, finance, operate and maintain a massive people mover system at Los Angeles airport. The complex, which will link the main LAX terminal building with a new auto rental facility, will eventually include nine trains operating simultaneously through six stations. It is Balfour Beatty's first public private partnership in the U.S.

Chances are you’ve never heard of Belmont, Arizona, but that could soon change. Microsoft CEO Bill Gates investment arm has purchased a whopping 25,000 acres of land west of Phoenix off I-10 to build a new smart city. The community with an infrastructure and communication spine of digital networks and data centers would contain 80,000 homes along with retail and commercial entities. Belmont would also be in the path of the planned I-11 freeway linking Phoenix and Las Vegas.

If the odds are a million to one against something occurring, chances are 50-50 it will.

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