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Construction Spending Continues Moving Higher09-08-15 | News

Construction Spending Continues Moving Higher
Modest Gain For Month, Big Jump For Year

Construction spending data from the U.S. Census Bureau shows private sector nonresidential spending amounted to $407.0 billion, which is 18.2 percent higher compared to July 2014. The manufacturing sector gained 4.7 percent from June to July, but is up 73.1 percent year-to-year. Commercial was down 1.5 percent for the month, but moved 5.0 percent higher annually.

Construction spending data for July increased less than one percent month-to-month, but has jumped nearly 14 percent for the year.

Spending is also up almost 10 percent year-to-date. The U.S. Census Bureau's July report shows total construction spending, which combines both the private and public sectors, at $1,083.4 billion, up 0.7 percent from the $1,075.9 billion in the previous month. Spending for the month was 13.7 percent higher than July 2014, and 9.3 percent better than the same seven-month time frame in 2014.

Subgroups of total construction spending are the private and public sectors. Total private sector spending came in at $787.8 billion, or 1.3 percent higher than June, and 17 percent higher compared to July 2014.

Under the private sector, residential construction projects accounted for $380.8 billion, up 1.1 percent over June, and 15.6 percent higher year-to-year. Single-family homes increased 2.1 percent for the month, and 15.8 percent for the year. Multifamily projects climbed 2.1 percent from June to July, and 21.2 percent year-to-year.

Private sector nonresidential spending amounted to $407.0 billion, or 1.5 percent above June, and 18.2 percent higher compared to July 2014. The big monthly gainers were: religious facilities, up 5.9 percent; manufacturing, 4.7 percent; and transportation and power, each at 2.1 percent. The best yearly gainers: lodging, 41.2 percent; offices, 29.2 percent; amusement and recreation, 60 percent; and manufacturing, 73.1 percent. Commercial was down 1.5 percent for the month, but moved 5.0 percent higher annually.

Total public sector spending amounted to $295.6 billion, or 1.0 percent less than June, but 6.1 percent better year-to-year.

The public sector residential category was down 0.1 percent for the month, but jumped 29 percent for the year. Public nonresidential spending was down 1 percent, and 5.7 percent higher year-to-year. Education was 3.0 percent lower on a monthly basis, but 2.6 percent higher annually. Highway construction was 0.2 percent lower from June to July, but was up 9.1 percent year-to-year. Commercial was down 14.7 percent monthly, but higher by 24 percent annually.

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Existing home sales in July were considerably higher compared to the average of the past 10 months of July, the National Association of Realtors has found.

A bar chart on the NAR web page that contains this story shows that about 5.5 million units were sold in July 2015, while the 10-year average for that month is right around 5 million homes.

Of the four major regions of the nation, the Northeast was the only one that fell slightly below existing home sales 10-year average. The other regions all showed stronger sales.

The Midwest and South were up above average by more than 15 percent, and the West has risen 9 percent, according to NAR. At the same time, the median home price is also higher than the 10-year average. In its 10-year review, the NAR found home prices began to drop in some regions in 2006, a falling trend that extended to about 2009.

Prices began turning upward in 2012, the NAR said.

There is also a shortage of homes for-sale in the current market. There were fewer homes available for sale this past July than the 10-year July average.

"In 2005, the U.S. had the fastest pace of homes sold relative to the inventory, taking 4.6 months," NAR said. "In 2010, the U.S. had the slowest pace, taking 11.9 months to sell the supply of homes on the market."

The 10-year July average in supply is 7.7 months, compared to the most recent July, which is at 4.8-months.

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