January 7th, 2014
Construction spending received a boost in November, reaching levels not seen since 2008.
According to recent data from the U.S. Department of Commerce and the Census Bureau, total construction spending rose 1 percent in November to a seasonally adjusted annual rate of $934.4 billion compared to October's revised estimate of $925.1 billion. The figure was also a 5.9 percent increase over November 2012's estimate of $882.7 billion.
Total construction spending had seen some significant leaps in the months leading up to November. In July, spending was at $902.9 billion before rising to $903.8 billion in August and $916.5 billion in September. Moreover, spending for the first 11 months of 2013 saw a 5 percent increase to $828.4 billion compared to $788.8 billion for the same period in the previous year.
In the residential construction sector, spending had seen a less consistent incline in the few months leading up to November:
November's figure was a 1.7 percent increase compared to October and a 16 percent gain compared to the previous year.
Stimulus from the private construction sector
The breadwinner for total construction spending in November was the private sector, which saw a 2.2 percent rise to a seasonally adjusted annual rate of $659.4 billion compared to October's revised estimate of $644.9 billion.
There was an 8.6 percent gain year over year, as November 2012's construction spending was $607.2 billion.
Burgeoning growth in the private residential market
Private construction in the residential sector as well as the single-family and multifamily markets had strong finishes at the end of November. Total residential construction spending increased to $345.2 billion in November from $339.2 billion in October, a 1.9 percent gain. On a year-over-year basis, there was 16.6 percent growth.
New single-family construction spending rose from $171.7 billion in October to $174.8 billion in November, a 1.8 percent increase. The year-over-year gain was 18.4 percent.
What this means for homebuying
One of the hot topics of the housing recovery has been the low level of new housing inventory, which has aided in driving up prices and increasing competition in among buyers in the real estate market. Gains in the residential construction industry bodes well for an infusion of new properties, giving more options to homebuyers and alleviating some of the demand.