Residential construction spending continued to lead the pack in June, posting strong year-over-year gains in the latest Census Bureau report.
Overall construction spending may have down in June, but it was another great month for residential construction spending, which continues to stride forward on the path to recovery.
Residential construction spending was up 23 percent year-over-year in June, and has now risen 45 percent since bottoming in early 2009 (here’s a great graph showing residential’s sterling performance as of late).
Construction Spending Lags in June
Meanwhile, the rest of the construction industry was a bit more melancholy by comparison:
- Overall construction spending was down slightly from May to June, falling 0.6 percent according to the latest Census Bureau numbers.
- Spending was up 3.3 percent year-over-year, though, and for the first six months of this year, construction spending has amounted to $408.5 billion, a 5.1 percent uptick from the same period in 2012.
- Meanwhile, aside from residential construction, the other sectors of construction posted slight declines.
- Nonresidential construction was down 0.9 percent from May to June, while public construction fell 1.1 percent, with education construction down 0.4 percent and highway construction down 2.8 percent.
- Public construction is now down to its lowest level since 2006.
Encouraging Residential Construction
Residential construction is usually the largest category of construction spending, and after some period away from the spotlight, it’s once again back at the top of the pack; because residential construction also leads the economy, that’s a good sign for the U.S. economy.
However, this is only the tip of the proverbial iceberg. As Bill McBride explained on Calculated Risk, residential construction is still 51 percent below its early-2006 peak, and is still below its historical averages; therefore, there is still considerable room going forward for residential construction to grow.