September Residential Spending Up

Residential construction spending showed some life in September, but it was all in multifamily construction and improvements spending. Courtesy of NAHB

Total nominal construction spending was at a seasonally adjusted annual rate (SAAR) of $801.7 billion, up 0.5 percent from the revised August estimate of $797.5 billion, and 10.4 percent below the year earlier reading of $894.8 billion. During the first nine months of this year on a not seasonally adjusted basis, total construction spending amounted to $612.6 billion, 11.2 percent below the $689.9 billion for the same period in 2009.

Spending on private construction was $482 billion SAAR, essentially flat from August's $481.9 billion. Year-to-date, it was down 15.2 percent to $382.2 billion NSA from $450.7 billion for the same period a year ago.

Private residential construction was at a seasonally adjusted annual rate of $231.7 billion, 1.8 percent above August's $227.7 billion, while September's year-to-date edged up 0.4 percent to $184.8 billion from $184 billion for the same period in 2009.

Single-family construction, showing the effects of the drop off in building following the expiration of the home buyer tax credit and consumer uncertainty about the economy, fell 2.6 percent from August to $107.7 billion, its fifth consecutive monthly decline. However, on a year-to-date basis, it is up 11.3 percent from a year earlier, to $86 billion.

If single-family starts, which were up in the last two months, continue to rise as NAHB forecasts, single-family construction spending will show a rebound within a few months. However, access to credit for both buyers (availability of mortgages) and builders (AD&C credit) will be key to determining how strong the rebound in single-family construction is.

Improvements, which exclude maintenance expenditures and improvement expenditures on rental, vacant, and seasonal properties, rose following four months of decline. September spending on improvements increased 6.2 percent to $111.2 billion from August's $104.7 billion. It was also up 5.9 percent to $88.3 billion on a year-to-date basis from the same period a year earlier.

- Courtesy of NAHB