By Peter Ricci
Private residential construction spending increased again in November, rising 0.4 percent from October to November in what is shaping up to be an encouraging 2012 for residential construction, according to the latest data from the Census Bureau.
Although we’ll have to wait until February to see December 2012’s numbers, chances are that residential construction for the year will post strong year-over-year increases over 2011. According to Bill McBride over at Calculated Risk, as of November, residential construction spending is 19 percent above 2011’s totals.
Residential Construction Spending – Outpacing Construction Industry
Though residential construction spending’s numbers were positive in November, the rest of the construction industry sloped downward a tad:
- Overall construction spending, at an annual rate of $866 billion, was down 0.3 percent from October to November, but 7.7 percent above November 2011; additionally, in the first 11 months of 2012, construction spending is up 9.2 percent from the same period in 2011.
- Private construction spending, which includes residential construction, was also down slightly, falling 0.2 percent monthly (though residential construction was up, nonresidential construction fell 0.7 percent). But still, as McBride wrote, the construction industry has made strides in 2012, with residential and nonresidential construction now up 33 and 30 percent, respectively, from their post-bubble lows.
- Public construction, which declined 0.4 percent from October, was in line with the other sectors; educational construction was unchanged, but highway construction did increase 0.5 percent.
Building Permits Anticipate New Construction
Though construction spending seems to have slowed a bit as 2012 came to a close, there is good news on the horizon. Building permits, which anticipate future construction spending, were up 3.6 percent from October to November and 26.8 percent year-over-year, with both single-family and multifamily building permits pointing towards a positive 2013. In fact, between permits and the dramatic rise in builder confidence in 2012, new construction is on many agents’ radars heading into the 2013 housing market, and as we reported earlier, new construction properties are definitely something you should tell your buyers about.