New residential construction spending fell 0.5% in March but permits, starts and sales all posted double-digit gains. This signals a pickup in jobsite spending in the spring. Single family spending has been about steady for eight months while multi family spending, mostly for condos, has continued to decline. But the recent surge in multi family permits and favorable turnabout in rent and vacancy rates will stop the long slide in multi family construction during the spring.
Construction spending for residential remodeling increased 5.9% in March. While the month to month gain is implausible, there is reason to believe that the remodeling market is recovering. It is expected to be much larger by yearend when existing home sales, consumer income and consumer confidence are all higher
The restraints on housing are gradually lessening. This includes the surplus of available or soon to be available homes fore sale, the flow of homes into the default phase and the number of households locked out of the mortgage market.
The recent turn to much weaker home prices overstates the weakness of the single family and condo markets. It is the result of a bunching up of lender sales of foreclosed homes caused by sales moratoriums while legal paperwork problems were cleared up.
The forecast is for residential construction spending to expand 1.9% in 2011 and 25.7% in 2012.
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