News

New Residential Construction Spending Up for the Seventh Consecutive Month

0 3838 Market Intelligence

New residential construction spending powered up 3.9% on a seasonally adjusted (SA) basis in October after ascending a healthy 3.1% in September. Not seasonally adjusted (NSA) year-to-date spending was 17.4% higher than a year earlier. Single-family construction spending rose 3.6% in October following the same 3.6% increase for September. Multifamily construction spending rocketed 5.4% after a modest 0.6% advance in September.

New residential construction spending powered up 3.9% on a seasonally adjusted (SA) basis in October after ascending a healthy 3.1% in September. Not seasonally adjusted (NSA) year-to-date spending was 17.4% higher than a year earlier. Single-family construction spending rose 3.6% in October following the same 3.6% increase for September. Multifamily construction spending rocketed 5.4% after a modest 0.6% advance in September. Year-to-date, single-family construction spending increased 17.3% and multifamily spending increased 17.9% compared to the same period in 2011.

Residential Construction Spending Data
(Billions of Current Dollars)

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Aug-12 Sep-12 Oct-12 Aug-12 Sep-12 Oct-12 Jan-11 to
Oct-11
Jan-12 to
Oct-12
New Single-family 131.6 136.4 141.3 128.3 131.9 136.4 90.2 105.8
  Month-over-Month % Change 3.1% 3.6% 3.6% 2.6% 2.8% 3.4%    
  (Year-over-year % change of NSA data) 20.8% 25.0% 29.3%       -5.5% 17.3%
New Multifamily (2) 28.1 28.3 29.8 27.7 28.0 28.7 18.9 22.2
  1.4% 0.6% 5.4% 2.2% 1.0% 2.5%    
  17.9% 19.5% 31.0%       -6.8% 17.9%
New Residential (3) 159.7 164.6 171.1 156.0 159.9 165.1 109.1 128.0
  2.8% 3.1% 3.9%          
  20.3% 24.1% 29.6%       -5.7% 17.4%
Residential Improvements (4) 129.1 127.5 129.8 126.5 127.5 128.8 96.6 105.0
  2.6% -1.2% 1.8% 2.2% 0.7% 1.0%    
  17.3% 13.0% 13.3%       1.2% 8.7%
Total Residential (5) 288.8 292.1 300.8 282.6 287.4 293.9 205.7 233.0
  2.7% 1.2% 3.0% 2.4% 1.7% 2.3%    
  18.9% 19.2% 21.4%       -2.6% 13.3%

(1) Monthly levels are seasonally adjusted at annual rates (SAAR figures).
(2) New Multifamily = New Private Multifamily + New Public Multifamily - Public Improvements (estimated by Reed Economics)
(3) New Residential = New Single-family + New Multifamily
(4) Residential Improvements include remodeling, renovation and replacement work. Number also includes RCD estimate of improvements to public housing.
(5) Total Residential = New Single-family + New Multifamily + Residential Improvements. Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

Single-Family Housing
November single-family housing starts fell 4.1% to 565,000 at a seasonally adjusted annual rate (SAAR) from 589,000 starts in October. The pullback was not unexpected given the strong increases in September’s and August’s starts, up 10.6% and 6.3%, respectively.

Single-family building permits slipped a modest 0.2% to 565,000, essentially unchanged from October’s 566,000. Meanwhile, the December NAHB/Wells Fargo Housing Market Index (HMI) posted its eighth consecutive gain, rising 2 points to 47, its highest level since April 2006. Increases in the HMI are closely associated with increases in housing starts one to two months later.

Multifamily Housing
After two months of sharp increases in multifamily starts, they decreased a modest 1.0% to 296,000 (SAAR). Given that multifamily starts tend to vary significantly from month to month, the three-month moving average is used to better gauge multifamily activity. The three-month moving average for November was 288,000, up 10.8% from October and its highest level since August 2008. The average has been above 200,000 starts for over a year. Meanwhile, the three-month moving average of multifamily building permits of 325,000 was also at its highest level since August 2008.

Residential Construction Data

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA) Year-to-Date (NSA)
  Sep-12 Oct-12 Nov-12 Sep-12 Oct-12 Nov-12 Jan-11 to
Oct-11
Jan-12 to
Oct-12
Jan-11 to
Nov-11
Jan-12 to
Nov-12
     Northeast Starts 77 77 73 79 76 76 56 67 63 72
       Month-over-Month
       % Change
4.1% 0.0% -5.2% -0.4% -3.8% -0.4%        
       Year-over-year
       % Change of NSA data
32.7% 20.7% -25.0%       -9.7% 19.2% -5.8% 13.9%
     Midwest Starts 146 153 158 129 143 152 84 104 91 117
  12.3% 4.8% 3.3% 14.2% 10.9% 6.5%        
  42.1% 48.0% 73.6%       -1.5% 24.1% -3.0% 28.0%
     South Starts 442 445 458 389 421 448 261 337 287 371
  17.6% 0.7% 2.9% 7.0% 8.3% 6.5%        
  35.7% 42.7% 32.3%       0.2% 29.2% 2.4% 29.5%
     West Starts 198 213 172 184 194 194 112 149 125 161
  16.5% 7.6% -19.2% -2.5% 5.4% 0.3%        
  19.9% 63.2% -2.4%       7.2% 33.1% 11.9% 29.5%
Total Starts (2) 863 888 861 780 834 871 513 657 566 722
  15.1% 2.9% -3.0% 4.9% 6.8% 4.4%        
  32.3% 45.1% 21.9%       0.1% 28.1% 2.4% 27.5%
     Single-family Starts 595 589 565 546 574 583 367 457 400 497
  10.6% -1.0% -4.1% 4.1% 5.1% 1.6%        
  38.3% 39.0% 22.3%       -10.9% 24.6% -10.1% 24.5%
     Multifamily 268 299 296 234 260 288 146 200 167 225
  26.4% 11.6% -1.0% 6.8% 11.0% 10.8%        
  21.9% 58.2% 21.2%       44.9% 36.8% 53.4% 34.9%
New Home Sales (3) 369 368 NA 367 368 NA 258 312 281 NA
  0.8% -0.3%   0.8% 0.2%          
  20.8% 16.0%         -7.5% 20.9% -6.0%  
Manufactured Home
Shipments
47 55 NA 52 53 NA 42 47 48 NA
  -18.4% 17.7%   -2.6% 2.7%          
  -13.1% -5.4%         -3.1% 10.7% 1.1%  

Housing starts, home sales, and manufactured home shipments are all in thousands.
(1) Monthly levels are seasonally adjusted at annual rates (SAAR figures).
(2) Total may not equal the sum of its components due to rounding.
(3) Based on a survey of homebuilders; excludes homes built under contract and multi-family rental units.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

Outlook for Residential Construction
The outlook for the housing market and consequently for residential construction remains positive. The foreclosure problem is slowly receding. Single-family housing prices are increasing in numerous markets. Rental vacancy rates are falling and rents are rising. Mortgage rates hover near historic lows. The Federal Reserve has stated its intent to continue purchasing mortgage-backed securities. Financial institutions are showing a greater willingness to lend to homebuyers and to builders.

The new residential construction spending forecast is for an increase of 19.4% in 2012, 22.5% in 2013, and 15.4% in 2014.

Residential Construction Data

  Actual Forecast
  2009 2010 2011 2012 2013 2014
     Northeast Starts 62 72 68 78 91 107
       (Year-over-year % change of NSA data) -48.9% 15.9% -5.4% 14.7% 16.5% 18.2%
     Midwest Starts 97 98 101 126 165 176
  -28.0% 0.8% 3.1% 25.0% 30.9% 6.8%
     South Starts 278 298 308 403 471 526
  -38.6% 6.9% 3.5% 30.8% 16.9% 11.8%
     West Starts 117 120 133 172 223 288
  -40.5% 2.7% 10.5% 29.6% 29.8% 29.3%
Total Starts (1) 554 587 609 778 949 1,098
  -38.8% 5.9% 3.7% 27.8% 22.0% 15.7%
     Single-family Starts 445 471 431 533 627 731
  -61.6% 6.2% 54.0% 37.6% 31.3% 13.9%
     Multifamily Starts 109 116 178 245 322 367
  -28.4% 5.9% -8.6% 23.7% 17.7% 16.6%
New Home Sales (2) 375 323 306 364 420 513
  -22.7% -13.9% -5.3% 19.0% 15.3% 22.0%
Manufactured Home Shipments 50 50 52 55 62 70
  -39.2% 0.5% 3.1% 7.2% 11.6% 13.4%
     Residential Construction Spending (Billions of Current Dollars)  
New Single-family 105.3 112.6 108.2 129.1 158.0 182.8
  -43.3% 6.9% -3.9% 19.3% 22.4% 15.7%
New Multifamily (3) 35.9 24.1 22.6 27.1 33.3 38.0
  -30.0% -32.9% -6.0% 19.8% 22.7% 14.1%
New Residential (4) 141.2 136.7 130.8 156.2 191.3 220.7
  -40.4% -3.2% -4.3% 19.4% 22.5% 15.4%
Residential Improvements (5) 112.7 112.5 114.9 123.6 134.2 145.0
  -6.6% -0.2% 2.2% 7.6% 8.6% 8.0%
Total Residential (6) 253.9 249.1 245.7 279.8 325.5 365.7
  -29.0% -1.9% -1.4% 13.9% 16.3% 12.3%

Housing starts, home sales, and manufactured home shipments are all in thousands.
(1) Total starts may not equal sum of regions due to rounding.
(2) Based on a survey of homebuilders; excludes homes built under contract and multi-family rental units.
(3) New Multifamily = New Private Multifamily + New Public Multifamily - Public Improvements (estimated by Reed Economics)
(4) New Residential = New Single-family + New Multifamily
(5) Residential Improvements include remodeling, renovation and replacement work.
Number also includes RCD estimate of improvements to public housing.
(6) Total Residential = New Single-family + New Multifamily + Residential Improvements.
Total Residential may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein last update:Dec 21, 2012

Leave a comment

Or register to be able to comment.