Spending On Single Family Homebuilding Down 8 Percent From Last Year
A troubling trend of year-over-year decreases in construction spending has emerged, but homebuilders do not seem to be worried... yet.
New data from the U.S. Census Bureau shows that while residential construction spending in August was 0.9 percent higher than it was in July, it dropped 5 percent from last year. Spending on single family homebuilding was down more than 8 percent year-over-year.
Despite this downward trend, the most recent Housing Market Index from the National Association of Home Builders, a survey asking homebuilders to rate their confidence in the housing market for the next six months, was the highest that it has been all year.
NAHB Chief Economist Robert Dietz had this to say in a recent press release:
“Solid household formations and attractive mortgage rates are contributing to a positive builder outlook. However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB’s Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas.”
Spending on residential improvements, or remodeling projects, increased 0.8 percent from July to August but decreased 6.4 percent year-to-date.
“Construction firms are using a variety of strategies—raising pay, increasing training and becoming more efficient—to cope with labor shortages. Public officials can help by doubling investments in career and technical education and permitting more immigrants with construction skills to legally enter the country,” said Stephen Sandherr, CEO of the Associated General Contractors of America in a statement.
- Allowing more immigrants to legally enter the country to work in construction
- Allowing construction students to qualify for Pell Grants
- Boosting investments in modern versions of cCareer and Technical Education programs
Trouble could be on the horizon if this year-over-year drop in construction spending persists through the end of 2019.