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Significant Gain in July Home Improvement Spending09-23-16 | News
Significant Gain in July Home Improvement Spending
Remodeling Project Expenditures Rise 1.5 Percent


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The National Association of Home Builders analyzed data on construction spending for the month of July, and found that home improvements pretty much helped to drive total private sector construction spending up for the month.


Total private-sector construction spending in July came in at $875.0 billion, 1.0 percent better than June, and was bolstered by significant growth in nationwide home improvement and remodeling projects.

The National Association of Home Builders discovered this after analyzing Census Bureau construction spending data for the month of July, a report that was released in early September. Home improvements amounted to $147.5 billion in July, up 1.5 percent versus June.

Meanwhile, spending on single-family homes and multifamily projects both declined in July. Single-family spending edged down to $238.1 billion, a drop of 0.2 percent compared to June. And multifamily spending decreased to $59.8 billion, down 0.6 percent month-over-month. On an annual basis, however, multifamily spending has increased 19.8 percent, while single-family spending is 1.7 percent higher.

The multifamily sector, in fact, has exhibited strong growth since 2010, the NAHB said, while the single-family sector and home improvement spending has increased only modestly over the last six years.

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NAHB officials believe growth in new single-family spending over the rest of 2016 will be consistent with the modest rise in single-family starts.

Signs of Easing in High Cost of Housing
Housing is slowly becoming more affordable, according to the chief economist for job-site Indeed and senior fellow at the Terner Center for Housing Innovation at the University of California, Berkeley.

Jed Kolko said just over 49 percent of renters in the nation spent more than 30 percent of their incomes on rent in 2015. In his words, they are "cost burdened." This compares to about 50 percent just one year earlier. The 30 percent rate is the lowest since 2008.

In terms of households, 33.6 percent spent more than 30 percent of their combined incomes on rent. This compares to 34.6 percent in 2014. This was also the fifth straight year that household spending on rent has dropped.

Low mortgage rates and the fact renter and household incomes appear to be growing substantially have helped a great deal in helping to lower the cost burden on families.

Single-family home rentals have also declined, from 17 percent in 2014 to 16.8 percent in 2015.

On the down side, the number of occupied rental apartments increased 1.7 percent in 2015, versus the previous year. Also, the homeownership rate overall has declined to 63 percent in 2015, down from 63.1 percent a year earlier. And just 949,000 new households were created in 2015, a slight decline from 2014 and below normal levels of 1.2 million.

"While the overall decline in homeownership may turn out to be a longer-term shift to a lower level than what we saw during the bubble, the spike in single-family rentals was in part cyclical," Mr. Kolko said.






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