Improved housing market doesn’t lead to improved business credit within construction industry

March 11, 2014 by Jordan Takeyama

As a child, one of the things we all learn is cause and effect. If someone is hungry, then they eat food. If someone is tired, then they take a nap. So logically, one can infer that since we are seeing a recovering housing market, more people will want to buy houses, thus creating a need for more homes to be built.

But that’s what makes the findings from Experian’s Q4 Metro Business Pulse analysis all the more intriguing. Although the housing market is showing signs of improvement, the construction industry continues to struggle with below-average business credit health, including a lower-than-average risk score, paying their bills more days beyond contracted terms, had higher bankruptcy rates and had a greater percentage of delinquent debt than other industries.

However, despite the direction of the industry as a whole, there were pockets of progress, especially in areas hit hardest by the housing collapse. For instance, construction businesses in Phoenix, Ariz. had among the lowest delinquency rates across the industry (lower than approximately two-thirds of the industry).

Not so surprisingly though, other areas hit hardest by the housing bust were not as successful. Areas such as, Las Vegas, Nev., Miami, Fla., Fort Myers, Fla., and Orlando, Fla., all continued to struggle across most business credit health categories. In addition to having lower-than-average risk scores and high delinquency rates, the collective grouping paid their bills the most days past due, totaling roughly 92 days beyond contracted terms.

To see detailed findings from the report, as well as other business credit trends seen throughout the quarter, register for Experian’s Quarterly Business Credit Review Webinar on March 18, 2014, at 1 p.m. Eastern time.

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