May 1, 2024

Construction spending (the green bars above) declined 0.2% in March after having been unchanged in February.   Construction spending climbed for 12 consecutive months before declining slightly in the first three months of this year.  In the past 12 months it has risen 9.6%.  As indicated  below, spending on the construction of single-family housing has begun to climb after a long period of decline as the extreme shortage of available existing homes on the market has caused potential buyers to seek out new homes which are more readily available.  Nonresidential spending had been rising rapidly throughout 2023 but retreated in the three most recent months.

Private construction spending (excluding the government sector) fell 0.5% in March after  having risen 0.2% in March.  In the past year private construction has risen 7.3%.

Within the private construction spending category, residential spending fell 0.7% in March after having risen 0.7% in February.   Residential spending had been gradually rising for almost a year..  In the past 12 months residential construction spending has risen 4.3%. But what is important is that the monthly declines earlier are now being replaced by some growth in this particular series.  The inventory of existing homes for sale is about one-half of what it should be.  As a result, buyers are now turning to new homes which are more readily available.  As the sale of new homes has risen and builders are beginning to boost the pace of production.  In the past year construction of single family homes has risen 18.3% while multifamily construction has climbed by 3.5%,

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New home sales have begun to turn upwards because potential buyers, facing an extreme short supply of existing homes available for sale have turned to new homes as an option.  New homes are in more ample supply.  .

Nonresidential construction fell 0.2% in March after declining 0.5% in February.  It has been climbing rapidly but has retrenched in the first three months of this year.  In the past 12  months nonresidential construction has risen 11.1%.

Public sector construction rose 0.8% in March after declining 0.4% in February.  In  the past year such spending has risen 17.9%.  The increase in this category in the past year has been led by construction of offices, commercial space, health care, educational, amusement and recreation, power, highway and street, sewage and waste disposal, water supply, and conservation and development.

.Stephen Slifer

NumberNomics

Charleston, SC