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Residential Construction Spending Takes a Hit Money Spent on Homes Down $106 Billion from Last Year

July 31, 2007

Inman News

Spending on U.S. residential construction continued to decline in June, as the seasonally adjusted annual construction rate fell 16.4 percent from a year ago, the Census Bureau reported today.

The value of home construction put in place last month registered a rate of $544.3 billion, compared with $650.9 billion the same time last year. Compared to May, the rate was down 0.7 percent, marking the 16th consecutive monthly decline. This rate is a projection of a monthly total over a 12-month period, adjusted for seasonal variations in construction activity.

For all types of construction, the seasonally adjusted annual rate dropped 2.4 percent to $1.17 trillion in June, compared with $1.2 trillion in June 2006. Compared to May, the rate dipped just 0.3 percent from that month's $1.18 trillion rate, the report found.

During the first six months of this year, total construction spending amounted to $550 billion, off 3.5 percent from the $570.1 billion rate for the same period in 2006.

For spending on all types of private construction, which includes residential, hotels, commercial, educational and religious buildings, among others, the seasonally adjusted annual rate fell to $890.9 billion, which is down 0.3 percent from May and off 5.9 percent from a year ago.

In June, the estimated seasonally adjusted annual rate of public construction spending was $284.6 billion, nearly the same as the revised May estimate of $284.4 billion, but was up 10.4 percent from the same time last year when the rate was $257.8 billion.

Construction spending for the public educational sector was at a seasonally adjusted annual rate of $80 billion last month, down 0.6 percent from May but still 10.3 percent higher than a year ago. Highway construction was at a seasonally adjusted annual rate of $75 billion, off 1.1 percent from May but up 1.1 percent from last year.

According to the Census Bureau, month-to-month changes in seasonally adjusted statistics can show irregular movements, and it can take two months to establish an underlying trend for total construction and up to eight months for specific categories of construction.

Monthly statistics are preliminary estimates subject to revision in following months as additional data become available. The statistics are subject to sampling variability and error from bias, variance from response, nonreporting and undercoverage.

Copyright 2007 Inman News

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