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Construction Spending Changes Little in July09-14-16 | News

Construction Spending Changes Little in July
Residential Sector Up Only Slightly Vs. June

Construction spending, which includes both the residential and nonresidential sectors, was essentially flat in July, compared to June. But it is 1.5 percent higher on a year-over-year basis, and is up 5.6 percent year-to-date.

Construction spending in July amounted to $1.153 trillion and was essentially flat compared to June, the Commerce Department said in its monthly new construction report.

From January to July, spending was 5.6 percent higher than the same seven-month time frame in 2015. And July's pace is still 1.5 percent above the same month of a year earlier. Total private sector construction spending in July came in at $875.0 billion, 1.0 percent better than June.

Residential spending was at $445.5 billion, or 0.3 percent higher month-over-month. Nonresidential spending was at $429.5 billion, or 1.7 percent above June's rate. Within residential: single-family spending fell 0.2 percent, while multifamily dropped 0.6 percent.

Public construction spending declined 3.1 percent in July.

The pace of construction spending in July could have been better had it not been for the public sector, which has been declining lately.

"Industry groups have consistently called on government at all levels to boost public funding???(R)???AE'?N????e'?N,A+to build and repair necessary infrastructure," Construction Dive said.

However, the nonresidential sector reached its highest level of spending ever in July, at $429.5 billion, due largely to office and shopping center construction, Construction Dive said.

Dodge Momentum Index Rises for Fifth Straight Month
Dodge Data and Analytics' Momentum Index climbed 1.3 percent in August to a reading of 134.9, driven by broad-based gains in the commercial and institutional sectors, the Wells Fargo Economics Group reports. This bodes well for the nonresidential sector.

The DMI has risen for five consecutive months and is now at its highest level since late 2008. Year-over-year, the DMI is up 15.6 percent.

"Given that the DMI typically leads nonresidential construction by a year, growth in the DMI points to continued gains in private nonresidential construction outlays," Wells Fargo said.

The Dodge Momentum Index is a monthly measure of the first or initial report of nonresidential building projects in planning, Dodge Data and Analytics said. These reports typically lead construction spending by about a full year.

August's result is due to a 1.7 percent gain in planned institutional projects, and a 1.0 percent hike in the commercial category.

"The Momentum Index is currently 16 percent above the same month of a year ago, reflecting this growth by major sector "?u institutional planning up 22 percent and commercial planning up 11 percent," Dodge Data said. "That both sectors are showing such improvement suggests that developers are shrugging off sluggish economic data and the uncertainty surrounding the November elections, and moving ahead with plans for new projects."

Single-Family Home Median Lot Size Steadily Dropping
The National Association of Home Builders reports that the median lot size of a new single-family detached home has decreased to its lowest level since it began tracking this data.

Analyzing the Census Bureau's Survey of Construction, the NAHB has calculated that the median lot size is now slightly less than 8,000 square feet, or about one-fifth of an acre.

The median lot size peaked at 10,000 square feet in 1995, and has been slowly declining, except for a short return to a median of 9,500 square feet in 2007, the NAHB said.

NAHB researchers said the change in density is attributed to high land prices, cautious post-recession business practices, and homeowners' desire to live in a pedestrian-friendly, close-knit community.