New residential construction spending rose 1.4% on a seasonally adjusted (SA) basis in December after rising 1.6% in November. This was its ninth consecutive monthly increase and its 14th increase over the past 15 months. For 2012, spending was up 19.6% over 2011. Increases in single-family construction spending slowed the last two months, up 0.8% in December, down from November’s 1.5% increase, which was down from October’s strong 3.8% increase. Multifamily construction spending shot up 4.5% in December after advancing a healthy 2.2% in November. For the year, single-family construction spending increased 19.4% and multifamily spending increased 20.3% over 2011.
Residential Construction Spending Data | ||||||||
| Monthly Figures (1) (latest actual values) |
3-Month Moving Average | Year-to-Date (NSA) | ||||||
| Oct-12 | Nov-12 | Dec-12 | Oct-12 | Nov-12 | Dec-12 | Jan-11 to Dec-11 |
Jan-12 to Dec-12 |
|
| New Single-family | 141.5 | 143.7 | 144.8 | 136.5 | 140.5 | 143.4 | 108.2 | 129.2 |
| Month-over-Month % Change | 3.8% | 1.5% | 0.8% | 3.5% | 3.0% | 2.0% | ||
| (Year-over-year % change of NSA data) | 29.7% | 30.6% | 29.0% | -3.9% | 19.4% | |||
| New Multifamily (2) | 29.6 | 30.2 | 31.6 | 28.7 | 29.4 | 30.5 | 22.6 | 27.2 |
| 4.0% | 2.2% | 4.5% | 2.2% | 2.5% | 3.6% | |||
| 29.7% | 30.4% | 34.3% | -6.1% | 20.3% | ||||
| New Residential (3) | 171.1 | 173.9 | 176.4 | 165.2 | 170.0 | 173.8 | 130.8 | 156.4 |
| 3.8% | 1.6% | 1.4% | ||||||
| 29.7% | 30.5% | 29.9% | -4.3% | 19.6% | ||||
| Residential Improvements (4) | 135.1 | 134.3 | 138.2 | 132.1 | 133.8 | 135.8 | 114.9 | 127.0 |
| 2.2% | -0.6% | 2.9% | 2.4% | 1.3% | 1.5% | |||
| 16.9% | 12.3% | 17.4% | 2.2% | 10.5% | ||||
| Total Residential (5) | 306.2 | 308.2 | 314.6 | 297.3 | 303.8 | 309.7 | 245.7 | 283.4 |
| 3.1% | 0.7% | 2.1% | 2.9% | 2.2% | 1.9% | |||
| 23.3% | 22.2% | 24.2% | -1.4% | 15.4% | ||||
(1) Monthly levels are seasonally adjusted at annual rates (SAAR figures). | ||||||||
Single-Family Housing
Single-family housing starts inched up 0.8% to 613,000 at a seasonally adjusted annual rate (SAAR), a slowdown from December’s 6.7% jump but their highest level since July 2008. For 2012, there were 535,000 single-family starts, up 24.2% from 2011. Single-family housing is clearly in a recovery mode, but from a very low level. Single-family starts for 2012 were less than half of the average annual long-term needs for the nation. Thus there is significant room for single-family construction to expand further without creating a new bubble. This will have a positive effect on construction employment and economic activity in general over the next few years.
Single-family building permits increased 1.9% to 584,000, their highest level since June 2008, from 573,000 in December. Meanwhile, the February NAHB/Wells Fargo Housing Market Index (HMI) slipped a point, falling to 46. This may just be an indication that homebuilders and homebuyers are catching their breath rather than a significant downturn in their optimism.
Multifamily Housing
Multifamily starts fell sharply in January, down 24.1% to 277,000 (SAAR), after shooting up 34.7% in December. Since large swings in the monthly multifamily starts number is typical, the three-month moving average is used to smooth out some of the monthly variability to gain a better understanding of the health of multifamily construction. The three-month moving average for January fell 2.5% from December to 304,000, the second highest level since August 2008. On the positive side, the three-month moving average for multifamily building permits was up 4.0% to 336,000, its highest level since August 2008.
Residential Construction Data | ||||||||
| Monthly Figures (1) (latest actual values) |
3-Month Moving Average | Year-to-Date (NSA) | ||||||
| Nov-12 | Dec-12 | Jan-13 | Nov-12 | Dec-12 | Jan-13 | Jan-11 to Dec-11 |
Jan-12 to Dec-12 |
|
| Northeast Starts | 68 | 116 | 75 | 74 | 87 | 86 | 68 | 80 |
| Month-over-Month % Change |
-12.8% | 70.6% | -35.3% | -2.6% | 17.5% | -1.1% | ||
| Year-over-year % Change of NSA data |
-32.9% | 90.5% | 2.2% | -5.0% | 17.7% | |||
| Midwest Starts | 154 | 190 | 95 | 152 | 167 | 146 | 101 | 128 |
| -1.3% | 23.4% | -50.0% | 5.5% | 9.4% | -12.2% | |||
| 68.1% | 15.5% | -20.8% | 3.2% | 27.0% | ||||
| South Starts | 451 | 464 | 483 | 436 | 451 | 466 | 308 | 398 |
| 3.0% | 2.9% | 4.1% | 6.1% | 3.5% | 3.3% | |||
| 28.4% | 45.5% | 19.7% | 3.5% | 29.2% | ||||
| West Starts | 168 | 203 | 237 | 195 | 196 | 203 | 133 | 174 |
| -22.6% | 20.8% | 16.7% | -0.3% | 0.3% | 3.4% | |||
| -5.6% | 63.3% | 73.3% | 10.4% | 31.6% | ||||
| Total Starts (2) | 841 | 973 | 890 | 858 | 901 | 901 | 609 | 780 |
| -5.4% | 15.7% | -8.5% | 3.7% | 5.1% | 0.0% | |||
| 17.4% | 46.4% | 23.9% | 3.7% | 28.1% | ||||
| Single-family Starts | 570 | 608 | 613 | 583 | 589 | 597 | 431 | 535 |
| -3.2% | 6.7% | 0.8% | 1.9% | 1.0% | 1.4% | |||
| 22.6% | 21.0% | 19.6% | -8.6% | 24.2% | ||||
| Multifamily | 271 | 365 | 277 | 275 | 312 | 304 | 178 | 245 |
| -9.7% | 34.7% | -24.1% | 7.7% | 13.6% | -2.5% | |||
| 8.9% | 113.7% | 34.0% | 54.0% | 37.7% | ||||
| New Home Sales (3) | 398 | 369 | NA | 380 | 377 | NA | 306 | 367 |
| 9.3% | -7.3% | 2.8% | -0.9% | |||||
| 26.1% | 8.3% | -5.0% | 19.9% | |||||
| Manufactured Home Shipments |
56 | 53 | NA | 53 | 55 | NA | 52 | 55 |
| 1.2% | -5.2% | -1.0% | 3.8% | |||||
| -18.1% | -8.4% | 3.1% | 6.3% | |||||
Housing starts, home sales, and manufactured home shipments are all in thousands. | ||||||||
Outlook for Residential Construction
The housing market continues to show improvement. Housing prices are flat to rising in much of the country. The November 10-city and 20-city S&P/Case-Shiller® Home Price Index increased 4.5% and 5.5%, respectively, from November 2011. Rising prices help the mortgage market by keeping more loans from falling underwater and possibly into default, and lifting some loans, albeit a small number, above water. This reduces the number of foreclosures, which have been falling. Potential homebuyers feel more comfortable in their decisions. It also allows lenders to be more confident in issuing mortgages and in extending credit to homebuilders. Although interest rates on mortgages have risen a bit of late, they remain near historic lows. The Federal Reserve has indicated it plans to keep long-term interest rates low through the end of this year and very likely through the end of next year. Thus the prospects of continued improvement in both single-family and multifamily construction are excellent.
New residential construction spending is forecasted to increase 22.1% this year and to increase 15.4% in 2014.
Residential Construction Data |
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| Actual | Forecast | |||||
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Northeast Starts | 62 | 72 | 68 | 80 | 91 | 109 |
| (Year-over-year % change of NSA data) | -48.9% | 15.9% | -5.4% | 17.7% | 14.5% | 19.5% |
| Midwest Starts | 97 | 98 | 101 | 128 | 153 | 168 |
| -28.0% | 0.8% | 3.1% | 27.0% | 19.4% | 10.0% | |
| South Starts | 278 | 298 | 308 | 398 | 503 | 558 |
| -38.6% | 6.9% | 3.5% | 29.2% | 26.4% | 11.1% | |
| West Starts | 117 | 120 | 133 | 174 | 268 | 333 |
| -40.5% | 2.7% | 10.5% | 31.6% | 53.5% | 24.4% | |
| Total Starts (1) | 554 | 587 | 609 | 780 | 1,015 | 1,169 |
| -38.8% | 5.9% | 3.7% | 28.1% | 30.1% | 15.2% | |
| Single-family Starts | 445 | 471 | 431 | 535 | 689 | 796 |
| -28.4% | 5.9% | -8.6% | 24.2% | 28.9% | 15.5% | |
| Multifamily Starts | 109 | 116 | 178 | 245 | 325 | 373 |
| -61.6% | 6.2% | 54.0% | 37.7% | 32.6% | 14.6% | |
| New Home Sales (2) (7) | 375 | 323 | 306 | 367 | 422 | 515 |
| -22.7% | -13.9% | -5.3% | 19.9% | 15.0% | 21.9% | |
| Manufactured Home Shipments (7) | 50 | 50 | 52 | 55 | 62 | 70 |
| -39.2% | 0.5% | 3.1% | 6.3% | 12.5% | 13.4% | |
| Residential Construction Spending (Billions of Current Dollars) (7) | ||||||
| New Single-family | 105.3 | 112.6 | 108.2 | 129.2 | 156.5 | 181.1 |
| -43.3% | 6.9% | -3.9% | 19.4% | 21.2% | 15.7% | |
| New Multifamily (3) | 35.9 | 24.1 | 22.6 | 27.2 | 34.4 | 39.3 |
| -30.0% | -32.9% | -6.0% | 20.3% | 26.5% | 14.1% | |
| New Residential (4) | 141.2 | 136.7 | 130.8 | 156.4 | 191.0 | 220.3 |
| -40.4% | -3.2% | -4.3% | 19.6% | 22.1% | 15.4% | |
| Residential Improvements (5) | 112.7 | 112.5 | 114.9 | 127.0 | 143.7 | 155.2 |
| -6.6% | -0.2% | 2.2% | 10.5% | 13.2% | 8.0% | |
| Total Residential (6) | 253.9 | 249.1 | 245.7 | 283.4 | 334.7 | 375.5 |
| -29.0% | -1.9% | -1.4% | 15.4% | 18.1% | 12.2% | |
Housing starts, home sales, and manufactured home shipments are all in thousands. |
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Read more forecasts from Reed Construction Data:
Construction Spending Ends 2012 on a High Note
Nonresidential Building Construction Spending Increases at the End of 2012
Heavy Engineering Construction Ends the Year on a Sour Note
