2017 Construction Spending Ended Higher

The U.S. Census Bureau's annual report on national construction spending found that 2017 saw an increase of 3.8% over 2016 in total outlay on private and public building projects. The residential sector saw the largest growth in at 10.4% but nonresidential construction was down .6%.

Contractors Positive Again this Year
The Optimism Quotient of the Wells Fargo Construction Industry Forecast, which surveys key personnel in the building and equipment distribution sectors, is at a 20-year high of 133: 10 points above 2017's number and 25 points above 2016's results.

Construction Materials Expected to Get More Expensive in 2018
After a slight decline in construction input prices in December, January saw a 1.1% increase, 4.9% year-to-year, in what is forecast to be an ongoing trend. "Domestic and global economies are strengthening, business and investor confidence is elevated, and construction backlog is rising," said Associated Builders and Contractors chief economist Anirban Basu.

Strong Confidence from Consumers
Consumers' outlooks hit a high note not seen since late 2000 as the Consumer Confidence Index rose 6.5 points in February. The assessment of the current economy, up 7.7 points for the month, took most of the credit but the expectations score, which improved slightly, still was at or near recent highs.

Sales of New Homes Decline Once More
For the second month in a row, new home sales were down; falling 7.8% in January. The supply of new homes however hit their highest amount since 2014. This sets the stage for an active spring selling season according to the Wells Fargo Economics group though rising mortgage rates may challenge that.

Architecture Billings Index Is Highest in Over a Decade
Design Firms saw a strong start to business in the new year as the Architecture Building Index recorded it's best January score since 2007. The 54.7 mark was also almost two points above the previous month (any score above 50 indicates an increase in business month-to-month). New projects inquires hit 61.1.

Inventory Issues Keep Existing Homes Sales Down
With the supply of existing home sales 9.5% lower than this time a year ago, the sales for that sector January was off 3.2%; the second straight monthly decline. Single-family sales were the big loser with a 3.8% drop. On the plus side, the inventory of available homes actually grew 4.1% from last month.

Residential Construction Begins Year Well
In spite of a 2% slip in overall construction starts, pushed down by a soft public works sector, the value of residential starts saw a gain of 7% month-to-month, with multifamily housing showing renewed strength by posting a 39% jump. Nonresidential was up 1% while nonbuilding construction fell 18%.