Builders might want to brace themselves for a challenging spring selling season.
According to numbers released Monday by the U.S. Census Bureau, construction spending for new single-family homes dipped 0.2% on a monthly basis in January to a seasonally adjusted level of $114.1 billion. Overall U.S. construction spending, which covers private and public projects, also fell, declining 0.6% on a monthly basis to $884.1 billion in seasonally adjusted numbers.
In terms of new-home construction, January’s numbers represent a year-over-year drop of 8.6% for single-family compared to an annual 9.3% decline for overall construction spending.
More troubling, though, the monthly drop for single-family, although small at 0.2%, represents the first decrease in eight months, according to Patrick Newport, U.S. economist for IHS Global Insight, a research firm in Lexington, Mass.
“This report sheds light on a number of ongoing trends,” Newport wrote in research report. Those trends include a “bumpy” outlook for single-family starts in coming months, a “collapse in the market” for apartment and condo construction, a “worsening downturn in private nonresidential construction,” and a dip in public construction spending, which covers highways, roads, and more, according to Newport. “Spending on infrastructure categories has been falling during the past four months, although we expect the stimulus bill to reverse this trend soon.”
It suggests it could be a difficult spring for builders, who are hoping for a boost from the tax credit extension, which requires contracts to be signed by April 30.
Alison Rice is senior editor, online, at BUILDER magazine.