February’s 1.0% fall in residential construction spending was the smallest in almost two years because of an outsized 11% month to month rise in remodeling spending. This is suspect. Estimates of remodeling spending are from a different and less reliable source than estimates for the rest of construction. Large revisions are frequent. There is a risk that residential construction spending is not as strong as now reported.
However, other, usually more reliable, February housing data suggests that the housing market may be stabilizing. Housing starts are 6.5% above the December low point. Total sales of homes appears to have stabilized. The inventory of new and existing homes for sale is now falling quickly because homebuilders have slowed work to cut the completion of new home 9% in February.
The forecast expects an 11.6% fall in residential construction spending this year and a 10.6% gain next year. Housing starts, 1.065 million in February, will dip slightly more than rise to over 1.1 million by year end and to nearly 1.4 million by the end of 2009. This recoups only about one-third of the decline in 2006-08.
U.S. Residential Building Construction
(thousands of units)
| Monthly Figures (1) (latest actual values) |
|||||||
| Actual | Forecast | ||||||
| Jan-08 | Feb-08 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Northeast (% change is period versus same period, previous year) |
141 | 102 | 189 | 171 | 143 | 130 | 144 |
| -25.0% | -23.9% | 7.4% | -9.7% | -16.3% | -9.4% | 11.2% | |
| Midwest | 159 | 159 | 357 | 284 | 206 | 164 | 198 |
| -16.3% | -2.5% | 0.5% | -20.5% | -27.5% | -20.2% | 20.2% | |
| South | 534 | 555 | 1,001 | 912 | 676 | 542 | 658 |
| -23.6% | -30.5% | 10.4% | -8.9% | -25.9% | -19.9% | 21.5% | |
| West | 237 | 249 | 551 | 445 | 319 | 213 | 274 |
| -27.3% | -36.5% | 7.3% | -19.2% | -28.4% | -33.2% | 28.8% | |
| Total | 1,071 | 1,065 | 2,073 | 1,812 | 1,344 | 1049 | 1274 |
| -23.7% | -28.4% | 6.3% | -12.6% | -25.8% | -22.0% | 21.5% | |
| Total Single-family | 758 | 707 | 1719 | 1,474 | 1,038 | 721 | 928 |
| -32.5% | -40.5% | 7.1% | -14.2% | -29.6% | -30.5% | 28.6% | |
| Total Multi-family | 313 | 358 | 354 | 338 | 306 | 327 | 346 |
| 11.8% | 19.7% | 2.6% | -4.7% | -9.5% | 7.1% | 5.8% | |
| New Home Sales (2) | 601 | 590 | 1,279 | 1,049 | 774 | 594 | 712.5 |
| -32.5% | -29.8% | 6.5% | -18.0% | -26.3% | -23.2% | 20.0% | |
| Manufactured Home Shipments | 92 | 94 | 148 | 118 | 95 | 93 | 103 |
| -2.1% | 1.1% | 13.8% | -20.0% | -19.3% | -2.3% | 10.5% | |
(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Based on a survey of homebuilders; excludes homes built under contract and multi-family rental units).
Actuals: U.S. Department of Commerce, National Association of Realtors, Freddie Mac.
Forecasts and table: Reed Construction Data.
Mfg. home shipment data for Nov. and Dec.
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