Private Residential Construction Improves in March

While single family housing starts have bounced around, they have made little progress since July 2010. Similarly, multifamily housing starts have fluctuated widely, but returned to their July 2010 level in February and March 2011.

Private residential construction spending showed a moderate improvement in March, but the increase was the result of a strong rise in the volatile home improvement sector-spending on single- and multi-family housing continued to decline.

Construction Spending report indicated a 2.6 percent increase in private residential construction spending to $229.1 billion, with a large downward revision to February numbers (private residential construction spending was revised down to $223.25 billion from the previously reported $228.6 billion).

Home improvement expenditures rose 7 percent to $110.7 billion, following a major downward revision for February (February home improvement spending was revised down to $103.5 billion from $109.8 billion). However, single-family construction spending was 1 percent lower at $105.9 billion and multifamily construction spending was down 2.2 percent at $12.5 billion.

The weak single- and multifamily construction spending numbers reflect the depressed state of the housing sector, with housing starts struggling to gain any forward momentum since the steep decline in the three months following the conclusion of the home buyer tax credit in mid-2010.

However, there may be some sunshine on the horizon, with a moderate rise in housing starts in March. If sustained through April and May, further growth in housing starts will support an increase in residential construction spending in the next few months.

Total private construction spending was up 2.2 percent to $476.1 billion. The increase in private residential construction spending was supported by a 1.8 percent increase in private non-residential construction spending to $247 billion. Overall, total construction spending was up 1.4 percent to $768.9 billion in March

- Courtesy of NAHB