Construction spending up slightly
Between February and March, construction spending rose a slight 0.1 percent, according to the U.S. Census Bureau of the Department of Commerce, hitting $808.1 billion, up 6.0 percent from March 2011.
Private construction was $531.9 billion for March, 0.7 percent above February, while residential construction accounted for $244.1 billion for the month. Public construction spending was $276.2 billion, falling 1.1 percent below February, with highway construction also falling slightly (0.8 percent) for the month.
CalculatedRiskBlog.com observed, “On a year-over-year basis, both private residential and non-residential construction spending are positive, but public spending is down on a year-over-year basis. The year-over-year improvements in private non-residential are mostly due to energy spending (power and electric). The year-over-year improvement in private residential investment is an important change (the positive in 2010 was related to the tax credit), and this suggest the bottom is in for residential investment.”
Of note, commercial construction spending rose 8.9 percent over the year, and the spend for construction of manufacturing grow at the most rapid clip, rising 39.6 percent in the last 12 months, according to the U.S. Census Bureau. Construction spending on lodging grew 5.9 percent for the month while public safety construction spending fell 3.8 percent.
Residential construction spending
The Census Bureau reports that spending on single family units rose 3.8 percent for the month, and rose 10.3 percent for the year. Multi-family construction spending hiccuped by falling 3.1 percent in the month, but remains an astonishing 23.3 percent higher than a year ago.
The new home sector of housing was among the worst hit during the recession, but with signs of life in the market, Wells Fargo and the National Association of Home Builders (NAHB) have revised their forecasts for this spring to be more optimistic and positive, a hopeful sign for the real estate market overall.
NAHB reported last month that “Most builders and realtors report significant gains in buyer interest and sales. Moreover, the gains are organic rather than incentive induced. Unfortunately, conservative appraisals and tight mortgage underwriting continue to undermine a large number of deals. We suspect that the undertow from these two hindrances will subside over the course of this year, as the fog surrounding shadow inventories lightens up a bit and more lenders come back to the market.”