News

New Residential Construction Spending Advances for the Second Month in a Row

0 1896 Market Intelligence

New residential construction spending rose 1.2% in November after edging up 0.2% in October. Spending in this sector has now increased in five of the last six months. Single-family construction spending rose 1.5%, its sixth consecutive monthly increase. However, multifamily construction spending fell for the third month in a row, down 0.1% in November following a 1.5% decrease in October.

New residential construction spending rose 1.2% in November after edging up 0.2% in October. Spending in this sector has now increased in five of the last six months. Single-family construction spending rose 1.5%, its sixth consecutive monthly increase. However, multifamily construction spending fell for the third month in a row, down 0.1% in November following a 1.5% decrease in October.

Despite the recent setback for multifamily construction spending, our outlook for the sector remains positive. Continued low interest rates, falling vacancy rates, and rising rents bode well for multifamily construction. We also expect continued slow recovery in single-family construction as the national economy shows slightly more strength, resulting in stronger hiring, bolstering consumer confidence. Thus the outlook is for slow, but steady improvement in residential construction. The forecast is for new residential construction spending to increase 6.3% in 2012 and 8.0% in 2013.

Residential Construction Data

  Monthly Figures (1)
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Oct-11 Nov-11 Dec-11 Oct-11 Nov-11 Dec-11 2008 2009 2010 2011† 2012 2013
Northeast Starts 64 97 57 60 73 73 121 62 72 67.6 76 89
  Month-over-Month % Change 8.5% 51.6% -41.2% -10.4% 22.2% -0.9%            
  (Year-over-year % change of NSA data) -22.7% 40.0% -2.5%       -15.3% -48.9% 15.9% -5.6% 12.8% 16.1%
Midwest Starts 110 93 144 98 100 116 135 97 98 100 115 127
  12.2% -15.5% 54.8% 7.3% 2.4% 15.3%            
  14.9% -19.5% 132.4%       -35.8% -28.0% 0.8% 1.7% 15.5% 10.0%
South Starts 322 330 320 317 326 324 453 278 298 307 335 374
  -1.5% 2.5% -3.0% 1.7% 3.1% -0.7%            
  23.6% 27.8% 18.4%       -33.4% -38.6% 6.9% 3.1% 9.3% 11.5%
West Starts 132 165 136 145 153 144 196 117 120 133 150 191
  -18.5% 25.0% -17.6% -0.5% 5.5% -5.7%            
  37.7% 79.7% 0.0%       -38.9% -40.5% 2.7% 11.0% 12.5% 27.4%
Total Starts (2) 628 685 657 620 653 657 906 554 587 607 676 779
  -2.8% 9.1% -4.1% 0.7% 5.4% 0.6%            
  17.2% 27.8% 23.7%       -33.2% -38.8% 5.9% 3.4% 11.4% 15.3%
Total Single-family Starts 437 450 470 428 436 452 622 445 471 429 465 512
  3.6% 3.0% 4.4% 0.5% 1.9% 3.7%            
  0.6% -1.8% 10.2%       -40.5% -28.4% 5.9% -9.0% 8.4% 10.1%
Total Multifamily Starts 191 235 187 192 217 204 284 109 116 178 211 268
  -14.7% 23.0% -20.4% 1.1% 13.0% -5.7%            
  80.9% 156.6% 73.6%       -8.3% -61.6% 6.2% 54.1% 18.5% 26.6%
New Home Sales (3) 307 314 307 300 308 309 485 375 323 302 322 353
  1.7% 2.3% -2.2% 1.4% 2.7% 0.5%            
  8.7% 10.0% -100.0%       -37.5% -22.7% -13.9% -6.5% 6.5% 9.6%
Manufactured Home Shipments 56 69 NA 55 60 NA 82 50 50 49 58 69
  2.4% 22.7%   7.8% 9.1%              
  40.8% 54.1%         -14.5% -39.3% 0.7% -1.5% 17.6% 18.5%
     Residential Construction Spending (Billions Current $)      
New Single-family 107.4 109.1 NA 107.0 107.8 NA 185.8 105.3 112.6 106.9 113.4 121.5
  0.5% 1.5%   0.5% 0.8%              
  1.1% 2.8%         -39.1% -43.3% 6.9% -5.1% 6.1% 7.1%
New Multifamily* 22.4 22.3 NA 22.8 22.5 NA 51.2 35.9 23.7 22.1 23.7 26.6
  -1.5% -0.1%   0.8% -1.4%              
  -6.3% -9.3%         -8.1% -30.0% -34.0% -6.7% 7.2% 12.3%
New Residential** 129.8 131.4 NA 129.7 130.2 NA 237.0 141.2 136.2 129.0 137.1 148.1
  0.2% 1.2%   0.6% 0.4%              
  -0.2% 0.6%         -34.3% -40.4% -3.5% -5.3% 6.3% 8.0%
Residential Improvements*** 117.1 120.0 NA 112.6 116.4 NA 120.7 112.7 112.5 116.4 122.7 128.2
  4.4% 2.5%   3.6% 3.4%              
  2.8% 6.1%         -13.5% -6.6% -0.2% 3.5% 5.4% 4.5%
Total Residential**** 246.9 251.4 NA 242.3 246.7 NA 357.7 253.9 248.7 245.4 259.8 276.3
  2.1% 1.8%   2.0% 1.8%              
  1.3% 3.0%         -28.5% -29.0% -2.1% -1.3% 5.9% 6.3%

Housing starts, home sales, and manufactured home shipments are all in thousands.
† 2011 Housing starts and new home sales are actual; manufactured home shipments and construction spending are estimates based on partial data.
(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Total starts may not equal sum of regions due to rounding.
(3) Based on a survey of homebuilders; excludes homes built under contract and multi-family rental units.
* New Multifamily = New Private Multifamily + New Public Multifamily - Public Improvements (estimated by Reed Economics)
** New Residential = New Single-family + New Multifamily
*** Residential Improvements include remodeling, renovation and replacement work.
**** Total Residential = New Single-family + New Multifamily + Residential Improvements.
Total Residential may not equal the sum of its components due to rounding.
Number also includes RCD estimate of improvements to public housing.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein

Leave a comment

Or register to be able to comment.