Construction Spending: February 2008

Today, the U.S. Census Bureau released their February read of construction spending again demonstrating the significant extent to which private residential construction is contracting particularly for single family structures and giving a clear indication that a non-residential downturn is now well underway.

With the tremendous weakening trend continuing, total residential construction spending fell 18.83% as compared to February 2007 and 34.35% from the peak set in February 2006.

Worse off though was private single family residential construction spending which declined 33.56% as compared to February 2007 and a truly grotesque 52.41% from the peak set in February 2006.

Non-residential construction spending, currently accounting for just under half of all private construction spending, remains the only pillar of strength gaining 13.15% as compared to February 2007 but a slowing trend is now clearly materializing.

Non-residential spending has now declined on a month-to-month basis for three consecutive months and is currently growing at the slowest annual rate since March 2006.

As was noted in prior posts, commercial real estate (CRE) appears to be coming under some pressure with increasing vacancy rates and falling prices.

Keep your eye on the last chart in the months to come for a clear indication of an continued pullback.

The following charts (click for larger versions) show private residential construction spending, private residential single family construction spending and private non-residential construction spending broken out and plotted since 1993 along with the year-over-year and peak percent change to each since 1994 and 2000 – 2005.