April 2011 U.S. Construction

Click image for larger view

Click image for larger view

Overall construction spending in the United States increased by 0.4 percent during April, to a seasonally adjusted and annualized rate (SAAR) of $765.0 billion. Private residential construction rose by the largest margin, gaining 3.1 percent; by contrast, public construction fell 1.9 percent.

Click image for larger view

Although the value of residential construction put in place rose, total housing starts declined by 10.6 percent -- to 523,000 units (SAAR). Total starts remained 77 percent below the January 2006 peak of nearly 2.3 million units.
 

Click image for larger view

Click image for larger view

Most of the retreat in starts occurred in the multi-family component (-41,000 units); single-family starts fell by 21,000 units.
 

Click image for larger view

New-home sales added to gains experienced in March, increasing by 7.3 percent to 323,000 (SAAR) in April. The median price of new homes sold also rose (by 1.6 percent) to $217,900.
 

Click image for larger view

Strangely, the inventory of new single-family homes shrank in both months-of-inventory and absolute terms even though completions outstripped sales by nearly one-third. Inventory stood at 175,000 units and 6.5 months (down from 7.2 months). It is interesting to note that the number of homes for sale was the lowest since such records began in January 1963.
 

Click image for larger view

Existing home sales fared worse than their new-home counterparts in April, falling by 40,000 units (SAAR), or -0.8 percent. The share of total sales comprised of new homes remained at 5.1 percent.
 

Click image for larger view

With the median existing home price rising by $3,900 (2.4 percent), to $163,700 in April, housing affordability retreated noticeably once again. We find this existing-home price appreciation somewhat surprising in light of other sources of data (e.g., the Federal Housing Finance Agency and S&P/Case-Shiller) that suggest existing home prices are falling -- not rising.

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation.” said David M. Blitzer, Chairman of the Index Committee at S&P Indices in reference to the S&P/Case-Shiller home price indices. “The National Index, the 20-City Composite and 12 metropolitan statistical areas (MSAs) all hit new lows with data reported through March 2011. The National Index fell 4.2 percent over the first quarter alone, and is down 5.1 percent compared to its year-ago level. Home prices continue on their downward spiral with no relief in sight. Since December 2010, we have found an increasing number of markets posting new lows. In March 2011, 12 cities -- Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland (OR) and Tampa -- fell to their lowest levels as measured by the current housing cycle. Washington D.C. was the only MSA displaying positive trends with an annual growth rate of +4.3 percent and a 1.1 percent increase from its February level.
 

Click image for larger view

“The rebound in prices seen in 2009 and 2010 was largely due to the first-time home buyers tax credit,” Blitzer continued. “Excluding the results of that policy, there has been no recovery or even stabilization in home prices during or after the recent recession. Further, while last year saw signs of an economic recovery, the most recent data do not point to renewed gains.”
 

Click image for larger view