Builders seeking signs of a housing recovery will have to sit tight. According to data released today by the U.S. Census Bureau, overall construction spending tumbled 3.3% in January to a seasonally adjusted level of $986.2 billion. Compared to the same month one year ago, that represents a 9.1% drop.
Single-family activity continued to contract in January, falling 9.3% on a monthly basis to a seasonally adjusted spending rate of $126.3 billion. When compared year-over-year, that stands as a 46% drop.
Multifamily construction spending also continued to slip 1.2% on a monthly basis and 9.1% annually for a seasonally adjusted pace of $39.4 billion in January.
These continuing negative numbers from the single-family and multifamily housing sectors alike worry economists, who fret over the economic impact on the larger economy. “Although residential construction as a share of GDP has dropped from 6% in early 2006 to 3% in late 2008, it is likely to take its largest toll on the economy in the first quarter, reducing real GDP growth by as much as 1.5%,” Patrick Newport, U.S. economist for IHS Global Insight, said today.
Alison Rice is senior editor, online, at BUILDER magazine.