Single family market expanding slowly; multifamily market shrinking rapidly

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single family market expanding slowly; multifamily market shrinking rapidly

September 09, 2009 - Jim Haughey

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The housing market improved abruptly in July. Several months of gains in permits, starts sales and home pricing ended 39 months of declines in monthly single family jobsite construction spending. July spending increased 7%. Multi family construction spending fell 0.8% and residential remodeling spending was steady. Total residential construction spending increased 2.6%. This is the first monthly increase since March 2006.

Residential construction spending is projected to be steady to only slightly higher for the balance of the year. The impact of the tax credit for first time home buyers will expand slightly after the initial surge in the last few months. But ebbing home affordability and the still declining multi family market will limit further market improvement for the rest of the year.

Residential construction spending is forecast to jump 18% from the end of 2009 to the end of 2010. This will be driven by a substantial improvement in buyer confidence from again rising employment and income.

U.S. Residential Building Construction
(thousands of units)

	Monthly Figures (1) (latest actual values)		Annual Figures
	Monthly Figures (1) (latest actual values)		Actual			Forecast
	May-09	Jun-09	2006	2007	2008	2009	2010	2011
Northeast starts (% change is period versus same period, previous year)	59	80	171	143	120	68	93	118
	-52.0%	-67.9%	-9.6%	-16.6%	-15.8%	-43.6%	36.4%	27.8%
Midwest	79	101	285	206	134	100	128	154
	-42.8%	-26.3%	-20.2%	-27.6%	-35.1%	-25.6%	28.3%	20.5%
South	276	280	912	676	425	277	329	419
	-43.9%	51.4%	-8.9%	-25.9%	-37.0%	-35.0%	19.0%	27.3%
West	137	126	444	317	196	129	156	203
	-37.2%	-39.1%	-19.4%	-28.5%	-38.3%	-34.2%	21.2%	30.3%
Total	551	587	1,811	1,342	900	573	706	895
	-43.3%	-45.5%	-12.6%	-25.9%	-32.9%	-36.4%	23.2%	26.8%
Total Single-family	409	482	1,474	1,036	616	451	577	736
	-39.8%	-26.4%	-14.3%	-29.7%	-40.5%	-26.7%	27.9%	27.5%
Total Multi-family	142	105	338	306	285	122	129	159
	-51.4%	-75.2%	-4.7%	-9.4%	-7.1%	-57.2%	5.5%	23.5%
New Home Sales (2)	362	395	1,049	769	481	399	497	635
	-28.9%	-19.1%	-18.0%	-26.7%	-37.4%	-17.0%	24.3%	27.9%
Manufactured Home Shipments	50	50	118	96	81	50	58	72
	-45.1%	-42.5%	-20.0%	-19.2%	-15.5%	-38.0%	16.3%	24.0%

(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.
Manufactured home data is for April and May.
Forecasts and table: Reed Construction Data.

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