New Home Construction – Is there a right time of year to build?

Byadmin

New Home Construction – Is there a right time of year to build?

Each quarter, The Hawaii Department of Business, Economic Development & Tourism gathers data on construction in Hawaii..

The 2018 data tables can be downloaded here. As a home or property owner looking into building a new home, one question you may not have consider is how the time of year can affect the cost of the project. The question is, does a new home cost less if it is begun between January and June vs July through December?

After analyzing the current data tables, a pattern emerged. First and second quarter construction costs are lower than third and fourth quarter. Since 1982, home construction costs have been close to 2% lower January through June, than yearly average.

Two percent may sound small, but on a $500,000 house that could be a $10k savings!

One likely explanation for the cost difference is a seasonally affected competitive market. Studying the quarterly employment number for the construction industry in Hawaii, as found here, shows a strong correlation. On average, more construction workers are employed in the third and fourth quarter each year, than the first and second quarter. In a competitive market, construction companies have lower operating costs with fewer employees – which could partly explain a cost difference when costs are passed onto the consumer. Another possible explanation would arise from reduced workloads in early months of the year (explaining the need for fewer employees) creating an incentive to reduce costs to attract more business.

Sometimes the best deals can be found when others aren’t looking.

 HONOLULU CONSTRUCTION COST INDEX
Percentage Difference between Annual Cost Average & Quarterly Cost
Year First Quarter Second Quarter Third Quarter Fourth Quarter
1982 0.10 -0.80 -0.30 1.00
1983 -1.93 -0.53 0.88 1.57
1984 0.08 -0.33 -0.13 0.38
1985 -0.55 -0.95 0.95 0.55
1986 -0.80 -1.20 -0.20 2.20
1987 -1.17 -0.77 0.43 1.53
1988 0.02 -1.28 -0.08 1.32
1989 -0.95 0.05 -0.15 1.05
1990 -3.50 -2.60 2.20 3.90
1991 0.17 -0.73 -0.13 0.67
1992 -1.15 0.05 0.45 0.65
1993 -3.27 3.43 0.73 -0.88
1994 -2.80 3.10 0.40 -0.70
1995 -0.64 -0.44 0.06 1.03
1996 -4.82 -3.02 3.75 4.08
1997 -1.19 -0.13 0.91 0.41
1998 0.15 0.05 -0.05 -0.15
1999 -0.10 1.20 -1.10 0.00
2000 -3.13 -1.43 1.07 3.50
2001 -2.97 -1.00 0.77 3.20
2002 -2.55 -1.13 0.68 3.00
2003 -0.64 -0.39 -0.07 1.10
2004 -4.14 -0.72 0.99 3.87
2005 -7.56 -2.10 3.08 6.57
2006 -6.77 -3.71 1.39 9.09
2007 -3.85 -2.79 -0.58 7.22
2008 -3.64 -3.14 -0.85 7.63
2009 -1.07 -3.78 -0.78 5.64
2010 0.70 -3.41 0.41 2.30
2011 0.50 -2.33 0.92 0.92
2012 0.19 -2.38 1.19 1.00
2013 -4.13 -3.03 1.88 5.29
2014 -6.59 -4.70 3.70 7.40
2015 -0.97 -5.26 1.45 4.77
2016 -1.26 -7.65 4.69 4.22
2017 -0.54 -6.20 4.04 2.70
Sum -70.79 -60.03 32.59 98.04
Average -1.97 -1.67 0.91 2.72
NATURAL RESOURCES, MINING & CONSTRUCTION JOBS
Comparison between annual average employment and quarterly employment
Year First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
          1990 -1,200 -700 400 1,400
          1991 100 400 200 -700
          1992 -400 -300 -200 700
          1993 500 400 300 -1,200
          1994 0 300 400 -800
          1995 300 0 400 -500
          1996 0 -100 300 -300
          1997 100 -300 200 0
          1998 -500 -300 400 300
          1999 -700 -300 500 600
          2000 -1,500 -400 1,000 900
          2001 50 -150 250 -100
          2002 -1,500 -450 800 1,050
          2003 -1,100 -150 600 550
          2004 -1,800 -500 750 1,500
          2005 -2,200 -400 1,050 1,600
          2006 -1,800 -750 800 1,900
          2007 -1,300 -300 700 900
          2008 1,100 450 50 -1,500
          2009 1,850 350 -550 -1,600
          2010 0 -100 -100 200
          2011 -900 -200 700 400
          2012 -1,000 -500 400 1,100
          2013 -900 0 500 500
          2014 -1,200 -500 700 1,100
          2015 -2,600 -900 800 2,500
          2016 -200 -100 400 -100
          2017 -700 -200 0 1,100
Sum -17,500 -5,700 11,750 11,500
Average -625 -204 420 411