Residential construction spending continued its forward progress in March, and the construction industry on the whole expanded impressively.
Residential construction had another strong month of activity in March, with construction spending on residential projects in the month rising to a seasonally adjusted annual rate of $294.9 billion, according to the latest analysis from the U.S. Census Bureau.
Though that’s down 0.4 percent from January, it represents an increase of nearly 21 percent from March 2012.
Things Looking Up for Residential Construction
It’s no mystery that residential construction went through some tough times in the post-bubble housing market, but the market has shown definite signs of recovery in the last year. In addition to the monthly and yearly increases, residential construction spending is also up 33 percent from its post-bubble low in early 2009 (though still down 56 percent from its early 2006 peak).
Residential construction is normally the largest sector of overall construction spending, and though that hadn’t been the case in the post-bubble market, it’s looking like we’re slowly returning to a normal market. As Bill McBride put it in his analysis on Calculated Risk, “Private residential [construction] is now about even with private non-residential, and residential will probably be the largest category of construction spending in 2013. Usually private residential construction leads the economy, so this is a good sign going forward.”
Overall Construction Spending Improving
The Census Bureau’s report also spotlighted some promising trends for overall construction spending. For March, though construction spending was down 1.7 percent from February, it was up 4.8 percent from March 2012 to a seasonally adjusted annual rate of $856.7 billion. Even more encouraging, for the first three months of 2013, construction spending totaled $181.7 billion, a 4.7 percent uptick from the same period in 2012.
As with previous months, nonresidential construction, at $303.5 billion, made up the largest chunk of total construction spending, though it was 1.5 percent below February’s revised totals. Also, public construction was down 4.1 percent to a rate of $258.3 billion, with education construction dropping 2.9 percent and highway construction down 5.2 percent.