Private Residential Construction Spending Climbs

The new single-family component of construction spending increased for the sixth consecutive month during November, notching a 1.5 percent month-over-month increase. On a year-over-year basis, this category jumped up 2.5 percent.

Private residential construction spending increased 2 percent during November. While the initial estimate for October was revised lower to 2.3 percent (from 3.4 percent) this was offset by an increase in the September reading from 0.6 percent to 1.5 percent. Private residential construction spending has risen in each of the last four months.

The new single-family housing market continues to face such roadblocks as tight lending standards, sluggish job growth and heavy competition for buyers from distressed properties.

However, the recent improvement in new single-family construction spending is consistent with other indicators such as the gain in new single-family home sales and rising homebuilder sentiment. In addition, the upward trend in building permits for new single-family homes points to more gains in spending activity over the near term.

Spending on new multifamily housing increased 1.3 percent on a month-to-month basis in November, partially offsetting the declines registered in the prior two months.

Once again, home improvement spending was a major driver of total residential spending activity, as this category increased rose 2.6 percent relative to October and is 4.1 percent above its year-ago level.

Private nonresidential construction spending was essentially unchanged during November 2011, but the initial estimate for October was revised appreciably lower and now shows a 1.8 percent decline.

- Courtesy of NAHB

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