Monday, February 01, 2010

Construction Spending Declines in December

by Bill McBride on 2/01/2010 10:21:00 AM

Residential construction spending was off slightly in December, and is now about 10% above the bottom in June 2009. I expect some growth in residential spending in 2010, but the increases will probably be sluggish until the large overhang of existing inventory is reduced.

Non-residential increased slightly in December, but the trend is clearly down. The collapse in non-residential construction spending continues ...

Construction Spending Click on graph for larger image in new window.

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending decreased in December, and nonresidential spending increased slightly.

Private residential construction spending is now 61.5% below the peak of early 2006.

Private non-residential construction spending is 22.0% below the peak of October 2008.

Construction Spending YoYThe second graph shows the year-over-year change for private residential and nonresidential construction spending.

Nonresidential spending is off 17.7% on a year-over-year (YoY) basis.

Residential construction spending is down 10.3% from a year ago, and the negative YoY change is getting smaller.

Only over the last few months - for the first time since the housing bust started - has nonresidential spending been off more on a YoY basis than residential.

Here is the report from the Census Bureau: December 2009 Construction at $902.5 Billion Annual Rate

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