Residential Construction Spending up 7.5% from One Year Ago

The latest Census estimate of total private residential construction spending is 7.5% higher than one year ago. In particular, the release shows significant improvement in construction spending for the single-family and multifamily categories. From May 2013, on a 3-month moving average basis, single-family construction spending increased by 12.3% and multifamily construction spending increased by 33.0%. The current seasonally adjusted annual rate for total private residential construction spending is $354.8 billion.

The current reading, however, is 1.5% lower than the revised April estimate. The three components of residential construction all fell in May. The home improvements category fell 1.9%, single-family spending fell 1.4%, and multifamily spending fell 0.6%.

The month-over-month decline in May should be considered along with the growth from last year.  If builder sentiment is a guide for future construction spending, cautious optimism is in order. The NAHB/Wells Fargo Housing Market Index for June rose four points to 49.

Strong Growth in Multifamily Construction Spending

Total private residential construction spending increased to a seasonally adjusted annual rate of $378.5 billion according to the latest Census estimates. The current reading is a slight increase of 0.1% from the revised March estimate and 17.2% higher than one year ago.

Single-family spending increased by 1.3% month-over-month while the home improvement category decreased by 2.2%. Multifamily spending posted another strong month-over-month increase of 2.7% from the revised March estimate.

The figures show significant improvements in residential construction spending for all categories from the prior year. From April 2013, on a 3-month moving average basis, construction spending in single-family increased by 14.6%, multifamily increased by 32.2%, and remodeling increased by 18.5%.

The growth in multifamily construction spending appears to match builder and developer sentiment about current conditions in the apartment and condominium market. The NAHB Multifamily Production Index (MPI) increased three points to 53 in the first quarter of 2014. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse. The MPI aligns with NAHB’s expectation of a 6 percent increase in multifamily starts this year.

Residential Construction Spending Flat

Residential construction spending posted a small increase in March but was effectively unchanged over the beginning of 2014. The total value of private residential construction put-in-place increased to a seasonally adjusted annual rate of $369.8 billion according to the latest Census estimates. The current reading is an increase of 0.8% from the revised February estimate of $367 billion but is 16% higher than one year ago.

Month-over-month single-family spending increased by 0.2% and the home improvement category increased by 0.6%. Multifamily construction was up with a relatively stronger month-over-month increase of 4.4%.

The figures show significant improvements in residential construction spending for all categories from the prior year. From March 2013, on a 3-month average basis, construction spending for single-family increased by 16.3%, multifamily increased by 30.8%, and remodeling increased by 12.8%.

A Frigid February Catches up to Construction Spending

Total private residential construction spending decreased in February after three consecutive months of growth. The unusually cold winter may have finally caught up to total residential spending and contributed to a slight month-over-month decline. Total private residential construction spending dropped to a seasonally adjusted annual rate of $360.4 billion according to the latest Census estimates. The current reading is a decrease of 0.8% from the revised January estimate, but 13.5% higher than one year ago.

Month-over-month single-family spending decreased by 1.1% as there was some weakness in the value of housing units started. The home improvement category decreased by 1.3%. Multifamily construction rebounded from a drop in January with a strong month-over-month increase of 2.6%.

The figures show significant improvements in residential construction spending for all categories from the prior year. From February 2013, on a 3-month moving average basis, construction spending in single-family increased by 18.3%, multifamily increased by 29.9%, and remodeling increased by 11.1%.

Although housing starts were down slightly in February, less weather-dependent permits were up almost 8% to 1,018,000. As the weather improves construction spending should pick up provided key supply chain issues, which remain a concern for many builders, do not restrict growth.

Residential Construction Spending Increases for Third Month

According to Census estimates, total private residential construction spending increased to a seasonally adjusted annual rate of $359.9 billion during January. The current reading is an increase of 1.1% from the revised December estimate and 14.6% higher than one year ago. Total private residential construction spending increased for the third consecutive month.

Single-family spending registered an increase of 2.3% for the month, while the multifamily category saw an increase of 1.0%. The home improvement category saw a slight decrease of 0.4% for the month.

The figures are well below their respective peaks but the data shows significant improvements in residential construction spending for all categories from the recent lows and the prior year. From January 2013, on a 3-month moving average basis, single-family spending increased by 20.6%, multifamily increased by 31.7%, and remodeling increased 9.4%.

Residential Construction Spending Increased 18.3% in 2013

Total private residential construction spending increased in December for the second consecutive month to a seasonally adjusted annual rate of $352.6 billion according to Census estimates. The current reading is a 2.6% increase above the revised November figures and 18.3% higher than one year ago.

Single-family spending registered a healthy increase of 3.4% for the month, while the multifamily category saw a more modest increase of 0.5%. The home improvement category saw an increase of nearly 2.0% for the month.

Spending in all categories continued to experience significant improvements from December of last year. On a 3-month moving average basis, single-family construction spending increased by 20.0%, multifamily increased by 34.5%, and remodeling increased by 14.0%.

Although spending continues to improve for all categories, it remains well below their respective peaks. Since market low points, total private residential construction spending is up 54.3%, single-family 99.4%, multifamily 172.5%, and improvement-related spending 29.7%.

The data show significant improvements in residential construction spending for all categories from the prior month and last year. The year-over-year increase in multi-family construction spending was large (34.5%) and is reflective of developers moving to meet an increase in the demand rental units. Rental vacancy is currently at a 12 year low.

Construction Spending Increases in November

Total private residential construction rebounded in November after a slight drop in October. According to Census estimates, total private residential construction spending increased to a seasonally adjusted annual rate of $345.5 billion in November. The current reading is a 1.3% increase from the revised October estimate and 16.6% higher than a year ago.

Single-family spending registered an increase of 1.8% for the month, while the multifamily category saw an increase of 0.9%. The home improvement category saw a healthy increase of 2.2% for the month.

From the start of 2013, on a 3-month moving average basis, single-family spending increased 15.1%, multifamily spending increased 26.6%, and remodeling increased 7.1%.

Since market low points, total private residential construction spending is up 51.2%, single-family 91.7%, multifamily 169.5%, and improvement-related spending 30.0%. The figures are well below their respective peaks but the data show an improvement from October estimates and significant improvements in residential construction spending for all categories from the prior year. In fact, the Census Bureau’s latest release shows that the seasonally adjusted number of homes under construction has now increased for 27 months in a row.

Construction Spending: Slight Decline in October Release

Total private residential construction spending decreased slightly from the revised August and newly released September figures to a seasonally adjusted annual rate of $326.9 billion in October 2013 according to Census estimates. The current reading is a 0.6% decrease from the prior month and 17.8% higher than a year ago.

Today’s release included September and October data for construction put in place. The September data release was delayed by the government shutdown. The September reading was a 1.7% increase from August and 10.3% higher than a year ago.

Total private residential construction spending was at a market low point of $228.5 billion in June 2009. Although spending improved for all categories, the figures are well below their respective peaks. Since market low points, total private residential construction spending is up 43.1%: single-family 86.9%, multifamily 163.6% and improvement-related spending 17.1%.

Single-family spending registered a decrease of 0.6% for the month. The the home improvement category saw a decrease of 1.2% for the month. The multifamily category saw a healthy increase of 2.2%.

For October, on a 3-month moving average basis, single and multifamily spending continued to experience improvements over the course of 2013. Single-family spending increased by 13.9% while multifamily increased by 22.3%. Remodeling decreased 2.9% on a 3-month moving average basis.

Spending continues to improve for all categories, but remains well below their respective peaks. The data show a slowdown from the prior month for single-family and improvements that are reflective of the soft patch the housing sector entered in the fall. In spite of this month-over-month slowdown, the data show significant improvements in residential construction spending for all categories from the prior year. In fact, builder confidence remains solid.

Construction Spending: Continued Improvement in August Data

Total private residential construction spending increased to a seasonally adjusted annual rate of $340.2 billion in August 2013 according to Census estimates. The August data for construction put in place data was released today after a delay of three weeks due to the government shutdown. The current reading is a 1.2% increase from the prior month and 18.7% higher than a year ago. After a tepid July, the pace of growth in construction spending improved in August.

Total private residential construction spending is at its highest level since August 2008. Since market low points, total private residential construction spending is up 48.9%, single-family 88.5%, multifamily 146.6%, and improvement-related spending 30.7%. Spending continues to improve for all categories, but remains well below their respective peaks.

Single-family spending registered an increase of 1.6% for the month, while the multifamily category saw a healthy increase of 3.2%. The home improvement category remained relatively flat with an increase of just 0.2% for the month.

For August, on a 3-month moving average basis, all categories continued to experience significant improvements over the course of 2013. Remodeling related spending is up 8.4% for the year-to-date. Single-family spending has increased by 12.9% and multifamily spending has increased 15.8%.

The data show improvements in construction for all categories. However, the government shutdown had yet to occur and is not reflected in the August data. A revised schedule posted by the Census indicates that September data for construction put in place will also be delayed one month. The September and October data are scheduled for release on the same date – December 2. This release should provide us with a better picture of construction spending moving forward.

Construction Spending: Improving at a Slower Rate

Total private residential construction spending increased marginally to a seasonally adjusted annual rate of $334.6 billion in July 2013 according to Census estimates. Spending continues to improves, but remains well below the peak pace of $676.4 billion in March 2006. The current reading is 17.2% higher than a year ago.

Single-family spending registered a slight increase of 0.5% for the month, while the home improvement category increased 0.8%. The multifamily category remained nearly unchanged with an increase of 0.1% for the month.

In spite of the tepid month-over-month increases for July, on a 3-month moving average basis, all categories have experienced significant improvements over the course of 2013. Remodeling related spending is up 6.5% for the year-to-date. Single-family spending has increased by 11.6% and multifamily spending has increased 16.0%.

Since market low points, total private residential construction spending is up 46.4%, single-family 84.5%, multifamily 143.8%, and improvement-related spending 29%.

The data shows improvements in construction categories for all categories but at a slower month-over-month rate than experienced in recently. The slow-down comes ahead of the effects of an increase in mortgage interest rates that has slowed both new home and pending home sales.