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Residential Construction Rebounding

Friday, September 12, 2014

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Home builders are walking taller in the wake of new Census Bureau estimates that show spending on both single- and multifamily construction soaring in the last year, according to the National Association of Home Builders.

Single-family construction spending increased by 9.9 percent and multifamily construction spending increased by 38.4 percent on a three-month moving average basis from July 2013 to July 2014, NAHB reported last week.

©iStock / Jsheets19

Multifamily construction spending increased by 38.4 percent on a three-month moving average basis between July 2013 and July 2014, according to the National Association of Home Builders.

The current seasonally adjusted annual rate for total private residential construction spending (single family, multifamily, and home improvements) is $358.1 billion, the organzation said.

Construction Upswing

The homebuilders' analysis followed the release of a U.S. Census Bureau report showing an 8.2 percent increase(±2.3%) in construction spending between July 2014 and July 2013.

Construction spending during July 2014 was estimated at a seasonally adjusted annual rate of $981.3 billion, the bureau said.

During the first seven months of this year, construction spending amounted to $535.4 billion, 7.9 percent (±1.5%) above the $496.3 billion recorded for the same period in 2013, the agency said.

Who's Building What

Spending on private construction increased by 1.4 percent over June, and public construction increased by 3 percent from June. Highway construction showed the largest one-month increase—6.9 percent, the Census Bureau reported.

NAHB Eye on Housing

The residential construction bounce brought builder confidence to 55 in the August NAHB/Wells Fargo Housing Index. Officials expect to top January's high of 56 by the end of 2014.

As always, however, officials cautioned that month-to-month changes in seasonally adjusted statistics "often show movements that may be irregular."

NAHB noted that the home-improvement component of residential construction spending had actually declined by 2.2 percent from one year ago, but it added that the July figure was 1.2 percent higher than the revised June estimate.

All three categories of residential construction spending (single family, multifamily, and home improvements) increased from June to July, NAHB said. Single-family spending increased 0.5 percent month-over-month; multifamily spending, 0.2 percent.

Builders Buoyed

The increase in construction spending matches the improvement in builder sentiment, the homebuilders said.

The August NAHB/ Wells Fargo Housing Index rose another two points in to 55. An index reading above 50 indicates more builders see the market improving than see it getting worse.

The confidence level for 2014 reached a high of 56 in January, but the homebuilders expect to top that by year's end.


Tagged categories: Government; Maintenance + Renovation; Market trends; Multifamily; National Association of Home Builders (NAHB); North America; Renovation; Residential Construction

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