WASHINGTON – Two indicators of immediate business opportunities for landscape contractors have each dropped for three consecutive months as of June, according to the U.S. Census Bureau. Construction spending fell nearly $4 billion in June, while new home sales fell 3.7 percent for the month. The three-month drop in these indicators is 3.7 percent and 14.2 percent since March, respectively. Lower numbers for both indicators translates into fewer potential clients for landscape contractors.
CONSTRUCTION SPENDING. Construction spending, also known as construction put in place, reports the dollar value of newly completed structures. It was down 1.7 percent in June, a decline led by lower spending on single-family residences, public projects and industrial buildings.
The decline in single-family completions, which yield residential landscaping work, is the start of a longer-term trend as higher mortgage rates are crimping sales and starts of new homes.
June multifamily completions, which yield commercial landscaping work, were steady, matching the high pace of starts and permits.
Industrial completions fell by more than $2 billion, ending a strong first half recovery. Educational building fell back from very strong levels in April and May.
NEW HOME SALES. The combination of Federal rate hikes, demographic pressures, the decline of the wealth effect and already high rates of homeownership are depressing new home sales, which dropped 3.7 percent in June to an annualized rate of 829,000 units.
Fixed mortgage rates declined in June, and have subsequently hovered near 8.2 percent, causing a slowdown in demand. Now builders are having a harder time selling the surplus of new homes on the market. There are now 4.9 months of supply on the market.
EXISTING HOME SALES. Conversely, existing single-family home sales, which could lead to potential landscaping or maintenance clients, increased 2.8 percent in June, according to the National Association of Realtors. The June increase follows an increase of 4.3 percent in May, making up for the 6.2 percent drop in April.