Construction spending continued to improve in January, with private construction showing particularly good progress.
Construction spending may have been flat month-to-month, but its yearly progress was strong as ever, according to the latest report from the Census Bureau.
At a seasonally adjusted annual rate of $943.1 billion, construction spending was flat from December to January, though it was up 9.3 percent from Jan. 2013.
Residential Construction Making Strides
Though overall construction numbers were strong, the private and residential markets were even more impressive:
- At $670.8 billion, private construction was up 0.5 recent from December and 9.2 percent from Jan. 2013.
- Meanwhile, residential construction was up 1.1 percent from December and 15 percent from last year.
- Though still 47 percent below its early 2006 peak, residential construction has risen 57 percent since bottoming in early 2009, and as Bill McBride noted on his Calculated Risk blog, residential activity is now once again the largest category of total construction spending, a development that bodes well for overall economic growth.
One other positive thing we should mention – residential construction activity is also becoming more balanced. During the post-boom years, when so few homes were being built and so few homes being sold, many builders shifted to general contracting to meet the surging demand for remodeling, and the U.S. saw record levels of home remodeling.
However, as Jed Kolko, Trulia’s chief economist, noted on his Twitter feed, those numbers are now starting to balance out and return to historic norms: