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Economic News

New home construction spending up 20.9%, public spending plummets

With conflicting indicators within the same report, it is difficult to call the bottom of the real estate sector, but housing appears to be seeing some improvement, which is good news for the long road to recovery.

construction spending

construction spending

Fifth gain in the past six months

According to the U.S. Department of Commerce, spending on construction projects rose 0.6 percent in September, the most recent month of their reporting, which has counterbalanced the falling commercial and government construction spending in recent months. While a very small increase, it is roughly what economists expected for this report, and offsets a 0.1 percent decline in August, according to revised data.

Private residential construction rose 2.8 percent to $285.86 billion, the highest level seen since December 2008, up 20.9 percent from September 2012. New home construction has been one of the hardest hit segments of the hardest hit sectors, so this improvement is welcomed news for anyone with a close eye on the economy. Some will call this a comeback, but comparing spending today to recent years paints a dismal picture, but one with glimmers of hope for a healthy road to recovery. Meanwhile, private non-residential construction (manufacturing, offices, etc.) fell 0.1 percent for the month.

Residential versus non-residential spending

To further illustrate the contrast between residential versus non-residential, the Commerce Department reports that business investment in building declined in the third quarter for the first time since early 2011.

Total private-sector construction spending increased 1.3 percent in September, and public sector construction fell 0.8 percent, marking its lowest level in nearly six years as government budgets are slashed in response to a stalled economy. Federal construction was down 6.2% and state and local spending fell 0.3%.

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Economic indicators are conflicting in recent months as spending in some sectors is up, but sliding in others, which is how all housing economic indicators are right now, as the sector finds its bottom.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.



  1. AgentGenius

    November 1, 2012 at 1:42 pm

    @miavalentinaceo thanks for retweeting, Mia! 🙂

  2. Ben Koshkin Nurseryman

    November 5, 2012 at 2:38 pm

    Increase  in private residential construction is at the highest level since December 2008 shows the interest of people in residential homes but what’s the reason why public sector construction is still struggling ?
    Ben Koshkin Director  BD Texas Development

  3. jaquelinegreenbacker

    November 15, 2012 at 1:34 pm

    Can anyone please tell that what happen to public sector construction, increase in percentage of buying a home is good for real estate market and according to  US department of commerce there is a growth in construction projects by 0.6%.
    Ben Koshkin  Managing Partner Texas First Residential Houston LLC

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