Monday, January 05, 2009

Construction Spending: November 2008

Today, the U.S. Census Bureau released their November read of construction spending again demonstrating the significant extent to which private residential construction is contracting particularly for single family structures while non-residential spending continues to show the telltale signs of contraction.

With the tremendous weakening trend continuing, total residential construction spending fell 23.42% as compared to November 2007 and 51.47% from the peak set in March 2006.

Worse off though was private single family residential construction spending which declined 41.94% as compared to November 2007 and a truly grotesque 67.42% from the peak set in February 2006.

Non-residential construction spending, currently accounting for just under half of all private construction spending, has been expanding at a slower rate in recent months with November showing a 10.27% increase as compared to November 2007.

As was noted in prior posts, commercial real estate (CRE) appears to be coming under some pressure with reports of increasing vacancy rates and falling prices and now a back-to-back monthly decline in spending.

Keep your eye on the last two charts in the months to come for a clearer indication of a 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.