RSSBillion of Remodeling Dropped from Census Construction Spending Estimates
 | Seed Newsvine |
The Census Bureau has dropped approximately $50 billion/year of private residential remodeling spending for vacant, rental and second homes from its monthly estimates beginning in May. This is an acknowledgement that the estimates were of questionable reliability. But it is a problem for those who need measurement of the total market for construction materials, labor or equipment.
The estimates had come from a survey of consumers; the balance of construction spending is estimated from surveys of contractors and/or building owners.
Two proxies are available for measuring the construction market. The National Association of Homebuilders (NAHB) provides a quarterly remodeling market index based on a “how’s business” survey of remodeling contractor NAHB members. The 1st quarter survey shows remodeling activity declining quickly and at the lowest level since the survey began in 2001. See here:
http://www.nahb.org/reference_list.aspx?sectionID=136
The Harvard Joint Center on Housing Studies provides the Leading Indicator of Remodeling Activity with quarterly estimates of remodeling spending on a rolling 12 month basis. The estimates are based on benchmarking several proxies for remodeling activity, such as remodeling contractor hours worked, to the former Census Bureau estimates. The 4th quarter report shows a 4.8% decline.
See here:
http://www.jchs.harvard.edu/media/lira/index.html
Both of these remodeling reports, while delayed three months behind the Census Bureau’s monthly estimates, provide useful insight into market trends. But neither is designed to the quick measures of changes in activity levels needed to drive estimates of materials, labor or equipment use for short term tactical planning. Also both of these reports portray residential remodeling as depressed and still declining in sharp contrast to the Census Bureau which shows increasing activity since the beginning of the year.
