Housing, the economic engine that powered through the last recession, continues to take its toll on the current economy. According to figures released this morning by the Census Bureau, private residential construction spending slipped 2.3 percent in July when compared to the previous month, to a seasonally adjusted annual rate of $358 billion. That represents a 27.5% drop compared to last year.
Overall, construction spending slid 0.6% in July as compared to June, to an annual rate of $1.084 trillion.
That figure includes $184 billion in single-family construction spending, which has certainly been suffering. This sector notched its 29th consecutive month of declines with these July numbers, according to Patrick Newport, U.S. economist at Global Insight, a research firm in Lexington, Mass.
"Spending on single-family homes remains a big drag on growth," said Newport, alluding to the 40.9% year-over-year plunge in July's rate of single-family private construction spending. "But its bite is getting smaller and is being partially offset by growth in multifamily construction. Going forward, the declines will shrink, and housing will become a progressively smaller drag on real GDP growth. Indeed, we expect residential investment to add to growth starting in the second quarter of 2009."
New private multifamily construction reported a slight monthly gain—0.2%—and only a slight year-over-year decline of 1.7% compared to July 2007. However, despite the housing slump and more optimistic outlook, this segment of the construction industry still remains significantly smaller than its single-family counterpart, with a seasonally adjusted spending rate of just $46 billion in July.
Alison Rice is senior editor, online, at BUILDER magazine.