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Wednesday, May 4, 2011

March 2011 U.S. Construction

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Overall construction spending in the United States increased by 1.4 percent during March, to a seasonally adjusted and annualized rate (SAAR) of $768.9 billion. Private residential construction rose by the largest margin, gaining 2.6 percent; public construction was nearly flat, rising by only 0.1 percent.
 
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Residential construction improved somewhat, with total housing starts climbing by 7.2 percent -- to 549,000 units (SAAR) -- in March. Despite the jump, starts remained nearly 76 percent below the January 2006 peak of nearly 2.3 million.
 
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Most of the increase in starts occurred in the single-family component (30,000); multi-family starts rose by only 7,000 units.
 
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New-home sales also improved relative to February’s record-low pace, increasing by 11.1 percent to 300,000 (SAAR) in March. The median price of new homes sold bounced back slightly (by 2.9 percent) to $213,800.
 
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Because sales rose while completions fell, the inventory of new homes shrank in both months-of-inventory and absolute terms. Inventory stood at 183,000 units and 7.3 months (down from 8.2 months). Interestingly, that number of homes for sale was the lowest since August 1967.
 
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Existing home sales fared somewhat better than their new-home counterparts in March, rising by 180,000 units (SAAR), or 3.7 percent. New home sales ticked higher as a percentage of the total; the share of total sales comprised of new homes expanded to 5.1 percent (from 4.9 percent in February).
 
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With the median existing home price rising by $3,600 (2.2 percent), to $159,600 in March, housing affordability retreated noticeably but remained near the all-time high set in February.
 
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“There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing.” said David M. Blitzer, chair of the Index Committee at S&P Indices, when presenting the most recent S&P/Case-Shiller home price indices. “Ten of the 11 metropolitan service areas (MSAs) that recorded index lows in January fell further in February. The one exception, Detroit, is 30 percent below its 2000 price level. The 20-City Composite is within a hair’s breadth of a double dip. Fourteen MSAs and both Composites have continued to decline month-over-month for more than six consecutive months as of February.”
 
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