Construction spending increased 9.2 percent in 2012, according to the latest analysis by the U.S. Census Bureau, closing out what has been the most positive year for the construction industry in the post-bubble housing market.
For the month of December specifically, construction spending was also positive, rising 0.9 percent from November and 7.8 percent over December 2011.
Construction Spending – Positive in December and 2012
The Census Bureau divides its data between private construction spending and public construction spending, and its numbers for private spending (which encompasses residential housing development) were easily the stronger of the two:
- For December, private construction spending was up 2.0 percent from November, with residential construction up 2.2 percent and nonresidential up 1.8 percent.
- For all of 2012, private construction spending was valued at $574.6 billion, a 16.1 percent uptick from 2011’s $495.0 billion.
- Residential construction increased 16.8 percent from 2011 to 2012, and nonresidential was up 15.4 percent.
Residential Construction Points to a Strong 2013
In the end, though, it’s the strong 2012 data for residential construction spending that’s the most important stat, though it’s just the latest in a long line of promising data from the housing construction sector. In addition to new single-family home sales increasing nearly 20 percent in 2012 over 2011, housing starts hit their highest level since 2008 in December, and as we just reported yesterday, the nation’s largest homebuilders, including D.R. Horton, PulteGroup and Ryland reported their best fourth-quarter earnings in years.
Covering the Census Bureau’s report on his Calculated Risk blog, Bill McBride wrote that residential construction spending is now up 39 percent from its post-bubble low, and is now once again at its historic level of the leading segment of construction spending.
“Private residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected),” McBride wrote. “This is now the largest category once again. Usually private residential construction leads the economy, so this is a good sign going forward.”