The month-on-month increase was driven by sharp increases in on-hold (29.4%) and abandonment (31.9%) activity. The change in bid date delayed activity was negligibly lower for the month.
Since the Federal Reserve began adjusting the Federal Funds Rate lower in mid-September, the PSI has made multiple drastic monthly moves, ranging from a 14% decline to a 17.6% increase.
November’s reading marks a new high for the PSI since its August 2024 low of 87.9. Although the latest reading implied that current stress conditions are 20% above the average level of 2021, the composite remains more than 5% below the level from the start of the year.
The election of President-elect Trump has brought with it many ideas and plans that could substantially shift the business landscape and impact both existing and prospective commercial real estate owners and developers.
Until regulatory conditions begin solidifying in 2025, we may continue to see unusual volatility in stress conditions. In particular, if trade becomes severely disrupted between America, Canada, and Mexico, it could significantly impact the pricing and availability of critical construction resources.
| Delay Bid Date | On Hold | Abandoned |
|---|---|---|
(Month-on-month changes of less than 0.25% are indicated as unchanged)
Public and private projects often exhibit distinct stress trends due to their disparate financing sources. However, actual and anticipated falling interest rates appear to be benefitting projects across both sectors.
In the public sector, the level of delayed bid date projects is approximately 10% above year-ago levels, while on-hold projects are nearly unchanged. Public sector abandonments often see a steep decline in the final weeks of the calendar year. However, this year, they remain unseasonally high. In the private sector, bid date delayed and on-hold projects remain comparable to year-ago levels, while current abandonments are 20% below year-ago levels.
The Project Stress Index (PSI) composite represents an equal-weight measure of the seasonally adjusted level of preconstruction projects that have experienced a delayed bid date, been placed on hold, or abandoned in the last 30 days. The PSI monitors nonresidential and multifamily projects in their preconstruction phases only, thus excluding any single-family home construction. Each component has been seasonally adjusted and then indexed against its 2021 average weekly reading. The independent tracking of each status type gives unique insights into market changes’ timing, direction, and amplitude. Additional information about the PSI, including detailed data about the individual readings for delayed, on-hold, and abandoned projects, can be found here.