Outlook varies for highway, housing-related construction; jobs shrink except in La.

The outlook for highway construction funding varies considerably by state. The e-newsletter www.stateline.org reported today that lawmakers or governors in Idaho, Massachusetts, Louisiana and Georgia rejected gas tax increases. "The Maine, Tennessee and Texas legislatures [and Michigan] are weighing gas tax increases in the closing days of their sessions....Despite the string of defeats in state capitols, there were some victories for tax proponents" or other funding sources for transportation in Vermont, Colorado, Massachusetts and the Oregon House. "Ohio lawmakers approved a $7.6 billion transportation bill...The North Dakota and Oklahoma legislatures also boosted transportation spending without increasing taxes....Kansas put off action until next year after learning the state needs to raise $18 billion over 10 years." On May 20, the Virginia Department of Transportation released a draft Six Year Improvement Program, to be considered by the Commonwealth Transportation Board next month, that covers fiscal years 2010-15 and totals $7.4 billion, 36% less than the plan approved for fiscal 2008-13 in June 2007. Highway construction would be cut 37%; rail and public transportation, -31%. The Energy Information Administration reported Thursday that gasoline demand in the four weeks through May 22 was 2% lower than in the year-ago period, a pattern that has prevailed for more than a year. Diesel fuel and vehicle sales are down even more. Gasoline and diesel fuel taxes are the principal funding sources for federal and state highway construction funds, supplemented by vehicle sales taxes and registration fees at the state level. Reports on home sales in April suggest a limited revival of single-family homebuilding and related construction of streets, utilities and neighborhood facilities may begin soon in some parts of the country. Sales of new single-family houses in April rose 0.3% (SAAR) above the revised March rate but fell 34% from April 2008, the Census Bureau reported on Thursday. The number of newly built single-family homes on the market shrank to 297,000 units, "thinning supplies to their lowest level since May 2001," the National Association of Home Builders commented. "April's results mark two consecutive years of monthly declines in the number of unsold new homes. 'This continued reduction in the new-homes inventory helps bring supply in line with demand, which is an important step toward the market's recovery. We can expect the pace of new home sales to bounce along the bottom a bit before picking back up towards the end of this quarter,' noted NAHB Chief Economist David Crowe." Existing-home sales-including single-family, townhomes, condominiums and co-ops-rose 2.9% in April "with strong buyer activity in lower price ranges," but were 3.5% below the level in April 2008, the National Association of Realtors reported on Wednesday. "The national median existing-home price for all housing types was $170,200 in April, which is 15% below 2008. Distressed properties, which accounted for 45% of all sales in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes." Single-family home sales rose 2.5% but were 2.8% below the year-ago pace. The median existing single-family home price was 15% below a year ago. Existing condominium and co-op sales increased 6.4% but were 9.4% lower than the pace a year ago. The median existing condo price was down 18.5% from April 2008. However, two trends may undercut improvement in homebuilding and related construction. "The average rate for 30-year fixed-rate [home-mortgage] loans jumped to 5.44% on Thursday, the highest level since early February, according to HSH Associates, a financial publisher. That was up from 5.29%Wednesday and 5.03% Tuesday," the Wall Street Journal reported today. "Meanwhile, rising unemployment is fueling a continuing steady increase in mortgage delinquencies and defaults. About 12.1% of first-lien home mortgages in the U.S. were overdue or in the foreclosure process at the end of March, the Mortgage Bankers Association reported," up from 8.1% a year earlier and 11.9% at the end of 2008. In April, seasonally adjusted nonfarm payroll employment decreased in 44 states and the District of Columbia and rose in 6 states, the Bureau of Labor Statistics (BLS) reported on May 22. Compared to April 2008, nonfarm employment decreased in 48 states and increased slightly in North Dakota, 0.6%; D.C., 0.1%; and North Dakota, less than 0.1%. The largest over-the-year percentage decreases occurred in Arizona, -6.9%; Michigan, -6.8%; Nevada, -6.1%; and Oregon, -5.6%. Seasonally adjusted construction employment in April declined in 41 states, rose in six and was unchanged (or within 100 of the March level) in Rhode Island, North Dakota, Delaware and D.C. Compared to April 2008, construction employment rose only in Louisiana (5%), which is finally experiencing major reconstruction following the 2005 hurricanes. The largest percentage losses in construction employment over the year were in Arizona, -28%; Connecticut, -22%; Oregon and Florida, -20% each; Nevada and Tennessee, -19% each. Real (net of inflation) gross domestic product (GDP) decreased 5.7% in the first quarter of 2009 at a seasonally adjusted annual rate (SAAR), according to today's "preliminary" estimate from the Bureau of Economic Analysis. The "advance" estimate released a month ago, which relied on less complete data, showed a decline of -6.1%. Real private nonresidential fixed investment in structures (including wells and mineshafts) fell 42%. Real residential fixed investment decreased 39%. Real government gross investment in structures fell 12%. The price index rose 2.8%, SAAR, for GDP and 4.7% for government structures, but fell 3.2% for private nonresidential structures and 4.6% for residential investment.