In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses construction spending.
- Construction spending squeezed out a very small gain of 0.1% in March. From 12 months ago, spending is up by 6%.
- Private residential construction did better, with a 0.7% monthly gain. Private commercial building construction also rose by the same amount, with office buildings doing particularly well. Still, there is a very long way to go after the nasty tumble a few years ago. On the negative end, construction of religious buildings and amusement/recreational centers fell. Construction activity by the government also declined, reflecting tight budget conditions at all levels of government.
- Because of rent increases and due to home sales recovery, residential construction spending is likely to rise by 10 to 12 percent in 2012 and another 15 to 20 percent in 2013. Falling vacancy rates in commercial buildings and from moderate economic expansion assures a higher level of private non-residential construction this year. Therefore, the rising construction will finally lead to creating jobs in the hard-hit construction sector this year and on.