Tag Archives: construction spending

CR: Construction Spending increased in February

Construction Spending increased in February

by Bill McBride on 4/01/2013 

Catching up …

The Census Bureau reported that overall construction spending increased in February:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2013 was estimated at a seasonally adjusted annual rate of $885.1 billion, 1.2 percent above the revised January estimate of $874.8 billion. The February figure is 7.9 percent above the February 2012 estimate of $820.7 billion.

Both private construction and public construction spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $613.0 billion, 1.3 percent above the revised January estimate of $605.2 billion. Residential construction was at a seasonally adjusted annual rate of $303.4 billion in February, 2.2 percent above the revised January estimate of $296.9 billion. …

February, the estimated seasonally adjusted annual rate of public construction spending was $272.1 billion, 0.9 percent above the revised January estimate of $269.6 billion.

Private Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 55% below the peak in early 2006, and up 36% from the post-bubble low. Non-residential spending is 25% below the peak in January 2008, and up about 37% from the recent low.

Public construction spending is now 16% below the peak in March 2009 and just above the lowest level since 2006 (not inflation adjusted).

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 20%. Non-residential spending is up 6% year-over-year mostly due to energy spending (power and electric). Public spending is down 1.5% year-over-year.

A few key themes:
1) Private residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected).  Private residential is now about even with private non-residential, and residential will probably be the largest category of construction spending in 2013.  Usually private residential construction leads the economy, so this is a good sign going forward.

2) Private non-residential construction spending usually lags the economy.  There was some increase this time, mostly related to energy and power – but the key sectors of office, retail and hotels are still at very low levels.

3) Public construction spending has declined to 2006 levels (not adjusted for inflation).  This has been a drag on the economy for 4 years.

Read more at http://www.calculatedriskblog.com/2013/04/construction-spending-increased-in.html#Eg0Yro8gR0suq4mr.99

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Eye on Housing: Residential Construction Spending Flat in January

Residential Construction Spending Flat in January

from Eye on Housing by Robert Dietz

Private residential construction spending was relatively unchanged for the first month of 2013 due to declines in the volatile remodeling spending category. Nonetheless, total residential construction spending remains near post-2009 highs and has experienced growth in 15 of the last 17 months according to data from the Census Bureau.

Spending on new single-family homes continued to expand, rising 3.6% over December’s pace. On a year-over-year basis, the nominal value of spending on new single-family homes has risen over 30%. Since bottoming out around the midway point of 2009, construction spending has surged 65%. The current NAHB forecast calls for single-family housing starts to grow in 2013, with a slower pace of expansion anticipated during the first quarter of this year.

Constr Spending Feb

Construction spending on new multifamily projects also increased in January, growing 1.7% from December 2012. Gains in spending have occurred in each of the last 16 months. On a year-over-year basis, the level of apartment spending has increased almost 55% and has – as of January – more than doubled from the cyclical low set in August 2010.

Offsetting the gains in single-family and multifamily construction, January saw a 4% drop in improvement spending that resulted flat headline growth for total private residential category.  The 3-month moving average of remodeling spending was down almost 2% but remains near post-2007 highs.

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Survey Indicates Growing Concern Over Builder Costs

Survey Indicates Growing Concern Over Builder Costs

by achaluvadi Eye on Housing 

The monthly NAHB/Wells Fargo Housing Market Index often includes a set of “special” questions on a topic of current interest to the housing industry. In January 2013, the special questions asked builders about the problems they faced in 2012 and expect to face in 2013. The survey was divided into 5 different sections with significant problems faced by the builders. One section covered problems related to building costs.  A year earlier, similar questions asked about problems faced in 2011, so it’s possible to trace the evolution of problems builders faced in 2011, 2012 and expect to face this year.

Chart1

According to the latest survey, more than three-fourths of the builders expect building materials prices to be one of their significant problems expected in 2013, up substantially from 46 percent in 2012 and 33 percent in 2011. Second is cost/availability of labor, a significant problem 51 percent of builders expect to face in 2013, up from 30 percent who said they faced the problem in 2012 and only 13 percent in 2011.  Nearly half of the builders expect cost/availability of developed lots to be a significant problem. This is also up from 24 percent who said they faced the problem in 2012 and 21 percent in 2011.

Against the backdrop of impending health reforms scheduled to go into effect in 2014, 42 percent of the builders expect costs of health insurance be a significant problem in 2013.  Like many of the cost categories further down on the chart, problems with health insurance were slightly less common among builders in 2012 than in 2011, but expectations indicate this small improvement is likely to be reversed in 2013.

The tendency for cost problems to become more widespread among builders—especially the top 3 categories of costs (materials, labor and lots)—is something you might expect as residential construction recovers from its trough. At this stage of the cycle, however, rising costs are beginning to emerge as a significant obstacle to a further and stronger recovery.

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Positive Run Continues for Residential Construction Spending

The post Positive Run Continues for Residential Construction Spending appeared first on Eye on Housing.

Private residential construction spending jumped 2.2% on a month-to-month basis during December 2012. The initial estimate of a 0.4% gain for November was moved up slightly to a 0.6% increase, but the October number was pushed appreciably higher from 1.3% to 3.2%. Spending has registered nine uninterrupted months of growth, as well as 16 of the last 17 months showing expansion. The nominal dollar level of spending has now reached its highest point since late 2008 and the average from the last three months is 32% above the cyclical low.

Spending on new single-family homes decelerated to its slowest pace of month-to-month growth since the first quarter of 2012, rising 0.8% versus November. On a year-over-year basis, the nominal value of spending on new homes has risen over 28%. In addition, since bottoming out around the midway point of 2009, construction spending has surged 59%. The current NAHB forecast calls for single-family housing starts to expand for the entirety of the outlook period, but a slower pace of growth is anticipated during the first quarter of this year. They are expected to re-accelerate over the remainder of 2013, and thus we anticipate a similar pattern will likely occur for construction spending.

construction spending

Construction spending on new multifamily projects jumped 6.2% during December 2012. Moreover, the initial estimate for November was revised higher from 0.5% to 1.8%, indicating spending activity finished the year strong. Of the three main categories of residential construction, multifamily has experienced the strongest rebound from its cyclical trough. Gains in spending have occurred in each of the last 15 months, with the latest month available representing the second largest percentage increase over this time period. On a year-over-year basis, the level of spending has skyrocketed more than 57% and has gained 97% from the bottom in August 2010.

Remodeling activity improved in December as spending climbed 2.9% from the prior month. Preliminary estimates for October and November were also revised higher, significantly higher in the case of October with a 1.9% decline turning into a 2.3% gain. The 3-month moving average points to a solid upward trend in home improvement spending and closed out 2012 at its highest nominal dollar value since September 2007. NAHB’s Remodeling Market Index (RMI) has offered a similar judgment on recent home improvement activity as the current and future market indicators have achieved their best readings since the first quarter of 2004.

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Construction Spending declined in November

Construction Spending declined in November

by Bill McBride on 1/02/2013  

In November 2012, private residential construction spending was the largest category for the first time since 2007 – but spending is still very low (at 1998 levels not adjusted for inflation). Note: Residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected).

The Census Bureau reported that overall construction spending decreased in November:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during November 2012 was estimated at a seasonally adjusted annual rate of $866.0 billion, 0.3 percent below the revised October estimate of $868.2 billion. The November figure is 7.7 percent above the November 2011 estimate of $804.0 billion.

Private residential construction spending increased, but both private non-residential and public construction spending declined:

Spending on private construction was at a seasonally adjusted annual rate of $589.8 billion, 0.2 percent below the revised October estimate of $590.8 billion. Residential construction was at a seasonally adjusted annual rate of $295.3 billion in November, 0.4 percent above the revised October estimate of $294.2 billion. Nonresidential construction was at a seasonally adjusted annual rate of $294.5 billion in November, 0.7 percent below the revised October estimate of $296.5 billion. … In November, the estimated seasonally adjusted annual rate of public construction spending was $276.2 billion, 0.4 percent below the revised October estimate of $277.4 billion.

Private Construction SpendingClick on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 56% below the peak in early 2006, and up 33% from the post-bubble low. Non-residential spending is 29% below the peak in January 2008, and up about 30% from the recent low.

Public construction spending is now 15% below the peak in March 2009 and just above the post-bubble low.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 19%. Non-residential spending is up 8% year-over-year mostly due to energy spending (power and electric). Public spending is down 3% year-over-year.

Read more at http://www.calculatedriskblog.com/2013/01/construction-spending-declined-in.html#YKc4OvVJiVB0fShr.99

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Residential Construction Spending Climbs to 4-year High

Residential Construction Spending Climbs to 4-year High

by Brian Lego —Eye on Housing

Private residential construction spending surged 3% on a month-to-month basis in October 2012. The initial estimate for September was revised downward from a 2.8% gain down to a 1.1% rate of growth; however, this was more than offset by an upward bump in the previously reported estimate for August from 1.2% to 2.8%. Following increases in 14 of the last 15 months, nominal spending on private residential construction activity is at its highest dollar value since late 2008. In addition, spending has risen 32% above the trough registered during the third quarter of 2010.

New single-family homes continued to post solid rates of growth, increasing 3.6% on a month-to-month basis for the second month in a row. Spending is also 29% above its year-ago level and has climbed 55% since bottoming out in mid-2009. This latest print on construction spending merely confirms the firming recovery for new single-family home construction that has been observed via housing starts and theHMI. With permit authorizations climbing rapidly and hitting their highest levels since the summer months of 2008, we anticipate this robust pace of growth in construction activity to continue over the near term.

construction spending

The positive momentum continued for the multifamily sector, notching its 13th consecutive monthly increase with a 6.2% gain over September 2012. Overall, the dollar value of multifamily construction activity has surged more than 82% from its cyclical low observed just two years ago, due in part to strong growth in renter demand. Multifamily starts have averaged better than 230,000 units over the duration of 2012 and given that permits have averaged approximately 280,000 units during the same time period, multifamily construction spending will likely rise further in the coming months.

Home improvement activity expanded 1.8% during October 2012, offsetting the downward revision of a 1.2% decline posted for September. Using the 3-month moving average to iron out some of the volatility in this metric, nominal remodeling spending has reached its highest point in five years. NAHB’s own Remodeling Market Index (RMI) has pointed to an even stronger assessment of current market conditions by professional remodelers as the RMI reached 50 for the first time since 2005.

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Construction Spending increased in September

Construction Spending increased in September

by Bill McBride on 11/01/2012  

Three key construction spending themes:

• Private residential construction spending is still very low, but increasing. Residential construction declined sharply for four years following the peak of the housing bubble, and then move mostly sideways for another three years.

• Private non-residential construction spending picked up last year mostly due to energy spending (power and electric), but spending on office buildings, hotels and malls is still very low.

• Public construction spending is down 4% year-over-year and has been declining for several years.

The Census Bureau reported that overall construction spending increased in September:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2012 was estimated at a seasonally adjusted annual rate of $851.6 billion, 0.6 percent above the revised August estimate of $846.2 billion. The September figure is 7.8 percent above the September 2011 estimate of $790.3 billion.

Private construction spending increased and public spending declined:

Spending on private construction was at a seasonally adjusted annual rate of $580.5 billion, 1.3 percent above the revised August estimate of $572.8 billion. … In September, the estimated seasonally adjusted annual rate of public construction spending was $271.1 billion, 0.8 percent below the revised August estimate of $273.4 billion.

Private Construction SpendingClick on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 58% below the peak in early 2006, and up 29% from the post-bubble low. Non-residential spending is 29% below the peak in January 2008, and up about 29% from the recent low.

Public construction spending is now 17% below the peak in March 2009 and at the post-bubble low.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 21%. Non-residential spending is also up 9% year-over-year mostly due to energy spending (power and electric). Public spending is down 4% year-over-year.

Read more at http://www.calculatedriskblog.com/2012/11/construction-spending-increased-in.html

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