Residential construction spending was flat in January, though overall construction spending remained above where it was a year ago, according to the latest analysis from the U.S. Census Bureau of the Department of Commerce.
For January, residential construction spending came out to a $304.6 billion annual rate, consistent from December’s $304.7 billion, while overall construction spending for the month was 2.1 percent lower than January but 7.1 percent higher than January 2012.
Residential Construction Spending – Quelling Low Housing Inventory?
With housing inventory at its lowest level in years, real estate professionals have been watching the new construction markets with great anticipation, hoping that newly-built units will relieve some of the pressures facing the nation’s existing-home market.
Though it may seem, on first glance, that residential construction spending was disappointing in January – that it’s not rising up to meet those calls for more new construction – it’s worth considering complementary data from the Census Bureau on building permits, which it released last week. As we reported at the time, building permits for new construction developments soared in January, rising 1.8 percent from December and 35.2 percent from the year before, with single-family authorizations up 1.9 percent and multifamily permits by 3.3 percent.
So though construction activity may seem muted, given the residential construction spending numbers, it’s likely that there’s greater activity on the way.
Buyer Interest in New Construction
And in the end, more new construction can only be a good thing for the housing market as it recovers, especially with more and more buyers showing interest in new construction properties.
Elizabeth Jakaitis, an agent with Prudential Rubloff in Lake Forest, said that along the North Shore, new construction has been fairly low, though with housing inventory at a 13-year low for the region, she’s hoping that the North Shore’s high-end builders return to the marketplace.
“We really need some new construction,” she said. “There is a lot of buyer activity, and a lot of people want new construction.”
Is this consistent in your market? Let us know in the comments section!