Single family construction spending increased 0.6% in December. This slim rise signals that the renewed and expanded homebuyer tax credit may not have the expected impact. Other reports on pending sales and starts suggest the same. Reed Construction Data still expects a 27% gain in housing starts in 2010 but this is less than the consensus expectations a few months ago. The mid-2009 housing revival was apparently more dependent on federal subsidies than it first appeared to be.

In part, the slow housing recovery is due to the difficulty homebuilders have getting land and construction financing. Many regional banks are struggling to survive and are actively trying to reduce their loss exposure to real estate loan losses. This problem is gradually easing but will be a restraint well into 2011

Multi family construction spending continued to slip lower at a rapid pace. The condo market is getting a small boost from the tax credit but it not enough to offset the growing weakness in the apartment market from a still rising vacancy rate driven by continued job losses which reduce the number of households.

The multi family market will continue to sink lower through the winter in parallel with other developer financed sectors. Household doubling up is reducing apartment demand. The large surplus of unsold condos has nearly halted new construction in the hot condo markets of 2004-06. The second home market remains very depressed due to the collapse of household wealth and the uncertain prospects for profits, bonuses and other contingent income.