Construction spending in the new single-family residential sector took a serious dive in September, plunging 41.3% compared to the previous year to a seasonally adjusted rate of $169.3 billion, according to figures released this morning by the Census Bureau.
According to Patrick Newport, U.S. economist at IHS Global Insight in Lexington, Mass., this represents the thirtieth consecutive monthly drop in private single-family construction spending.
Multifamily fared better, with a 2.7% monthly increase to a seasonally adjusted spending pace of $45.2 billion in September. But that figure still stands 1.7% below September 2007's spending level for multifamily construction. "This category is volatile, and September's increase is an aberration," Newport said in a statement. "Spending on multifamily units will soon be falling at double-digit annualized rates."
In contrast, overall construction spending reported a more moderate slide of 6.6% in September compared to the same month a year ago. Compared to August 2008, overall spending dipped just 0.3%, landing at a seasonally adjusted annual spending rate of $1,060.1 billion.
But bad news may be ahead, according to Newport. Today's report also showed that in September "public construction fell for the first time in eight months," Newport said, although he noted that "it is too soon to say if public construction has slipped into reverse. Going forward, however, we think that all four major construction categories—single-family, multifamily, nonresidential, and public construction—will be dropping by the end of the year."
Alison Rice is senior editor, online, at BUILDER magazine.