While the signs of a market slowdown for new residential construction have begun to surface, the construction spending numbers for August were still high enough to offset the effects of the slowdown. According to the Federal Savings Bank, Americans increased their spending for residential construction in August.
However, The U.S. Census Bureau’s Construction Spending Report, issued October 1st, the seasonally adjusted annual spending rate for August was $961 billion. This is an 8% decline from July’s $968.8 billion in residential construction spending. Reuters Corp. economists had expected a 5% uptick in spending for August. Unfortunately, private non-residential spending dropped significantly, which leveled out to a 1.4% reduction in construction spending totals.
But compared to the $915.3 billion in residential construction spending totals for August 2013, there has been a 5% increase overall. The first 8 months of 2014 saw an 8% increase in spending over the same period in 2013. So while there has been a month-to-month drop in spending, the overall spending trend for the year has been an increase over last year.
August’s total private residential construction spending fell .7% from July’s numbers. Although the projected earnings for the last quarter were not realized as analysts had hoped they would be, builders still spent money in the private residential sector. The minor decrease isn’t expected to affect the recovery and growth of the housing market, because 2014’s August numbers are still 3.7% higher than they were in 2013. August also saw builders increase their investments in the construction of single-family and multi-family properties.
In August, construction spending for single-family structures rose .7% over July’s amount and 8.3% over August 2013. Multifamily housing saw a 1.4% increase over July’s spending rates, and a staggering 34.9% increase over the multifamily construction spending in August 2013. The yearlong improvement trend that shows America’s construction market improving over last year extends to home sales as well, because the sales of newly constructed homes have also risen.
Q3 2013’s harsh financial climate dampened 2014’s start-of-year economic strength. However, the economy started to recover in the second quarter, largely due to the improvements in residential construction. After 2 straight quarters of reductions, residential construction reached an 8.8% gain over 2013. The economic stimulus of increased construction is expected to continue throughout 2014.