December brought little holiday cheer to the housing and construction industries this year. According to figures released today by the U.S. Census Bureau, construction spending declined 1.4% in December compared to the previous month to a seasonally adjusted level of $ 1.05 trillion. On an annual basis, that qualifies as a 3.6% drop.
Single-family construction, of course, got pummeled, plunging 8.1% in December alone on a monthly basis to a seasonally adjusted rate of $139 billion. Year-over-year, single-family activity is down 43.1%.
Construction spending for the much smaller multifamily industry dipped 3.2% to a rate of $41 billion, which is just 4.8% below its December 2007 activity.
Overall, “this was a dismal report,” said Patrick Newport, U.S. economist for IHS Global Insight, who found little good news to report in the commercial sector either, with the exception of increased private spending on electric power and manufacturing, specifically refineries.
“Going forward, businesses have few reasons to start new buildings or renovate existing ones,” he said. “The economy is in recession, job losses are mounting, too many hotels, malls, and auto dealerships were put up during the recent expansion, the securitization market for commercial real estate loans is totally frozen, commercial real estate prices are dropping, and credit is tight. As a result, spending on nonresidential construction is hitting a wall.”
Alison Rice is senior editor, online, at BUILDER magazine.