Electrical Marketing's Leading Economic Indicators - July 22, 2022 Update

Building permits slip in June

Privately‐owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,685,000, -0.6% below the revised May rate of 1,695,000, but +1.4%above the June2021 rate of 1,661,000. The U.S. Census Bureau said single‐family authorizations in June were at a rate of 967,000, -8% below the revised May figure of 1,051,000.

AIA's June Billings Index Shows Increased Demand

Architecture firms reported increasing demand for design services in June, according to the American Institute of Architects (AIA). The ABI score for June was 53.2 points. While this score is down slightly from May’s score of 53.5 points, it still indicates moderately strong business conditions overall (any score above 50 points indicates an increase in billings from the prior month). Also in June, both the new project inquiries and design contracts indexes moderated from May but continued to show growth, posting scores of 58.2 points and 52.2 points respectively.

“Ongoing project activity at architecture firms as well as new work coming online remains strong, pushing project backlogs up to seven months on average nationally,” said AIA Chief Economist, Kermit Baker in the press release. “In spite of heavy workloads, employment at architecture firms has stabilized, suggesting that adding new employees is becoming even more challenging as the building construction sector continues to recover.”

NAHB/Wells Fargo Housing Market Index drops sharply in July.

In a further sign of a weakening housing market, builder confidence in the market for newly built single-family homes posted its seventh straight monthly decline in July, falling 12 points to 55 points, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This marks the lowest HMI reading since May 2020 and the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.

“Affordability is the greatest challenge facing the housing market,” said NAHB Chief Economist Robert Dietz. “Significant segments of the home buying population are priced out of the market."