Construction numbers for housing took a surprising turn in April. Spending for private construction grew beyond analysts’ expectations. Residential spending, the most significant component of private construction, posted exceptional growth as well.
The unexpected uptick in residential construction spending is more than welcome in a housing market starved for inventory. Currently, housing supply is so dire that some economists have called it an inventory crisis.
- Spending on all new construction activity (residential, non-residential, and public project) increased 1.8% to $1.31 trillion in April
- Privately funded construction spending increased 2.8% to $1.01 trillion in April
- Residential spending increased 4.5% to $556.30 billion in April
April turned out to be a solid month for construction. The Census Bureau said that dollar value of new construction activity on residential, non-residential, and public projects was at a seasonally adjusted and annual total of $1.31 trillion. This represented a 1.8 percent increase from March’s total of 1.29 trillion and was 7.6 percent higher than the $1.22 trillion rate in April 2017.
The result was better than anticipated. Analysts polled by Econoday had expected the numbers to improve from the 1.7 percent decline in March but were looking at a consensus estimate of 0.8 percent. The range of estimates was 0.5 to 2.0 percent.
Privately funded construction was at a seasonally adjusted annual rate of $1.01 trillion, a 2.8 percent gain from March, and up 7.6 percent from the previous April. On a non-adjusted basis there was $84.04 billion in construction put in place compared to 78.88 billion in March. Through the end of April private construction totaled $305.27 billion, a 6.3 percent increase.
Residential spending is the largest component of private construction. Spending there was up 4.5 percent from March to a seasonally adjusted annual rate of $556.30 billion, 9.5 percent higher than spending in April 2017. Single-family construction was at a rate of $285.70 billion, unchanged from March but up 9.6 percent year-over-year. Multifamily construction spending rose 3.6 percent for the month but was 4.0 lower than a year earlier.
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