Non-Residential Housing Construction Decline Stops

Housing construction spending continued to decline in February, which contradicts much of the other (starts, prices, and sales) data suggesting that the housing market may have hit bottom.

Also reported today was a February increase in pending home sales.

Interestingly, non-residential construction stopped its brief decline, and remains higher than it was at the start of the recession and dramatically higher than it was during the housing boom.

Click to enlarge:

Comments

[2houndz:]

Could be because nonresidential buildout is on a longer timeframe and it took until early 2009 to finish and unwind the projects that were under construction. The chart doesn't get me very excited.

Apr 02 08:24 AM

[TeresaE:]

Non-residential housing is primarily growing due to government & hospital building. Completely unsustainable and truly indicates further taxation and burden for us in a few short years.

Great plan to "fix" anything.

Here in Michigan, as thousands of commercial buildings sit idle and empty (where did those people all find new jobs??), there is STILL-8 years into it-commercial building.

At the same time, the banks are calling commercial mortgages-which will result in MORE empty buildings, penny on the dollar auctions and make this current building trend an albatross.

Apr 02 08:51 AM

[Fabien Hug:]

How is that possible? Some level of detail would be welcome. I can't imagine banks, insurances and retail in a building spree these days.
This graph looks like the current situation is a small blip in a rosy situation. It doesn't make sense.

Apr 02 09:19 AM

[campo:]

CityCentre is in bankruptcy.

Apr 02 10:23 AM

[joof:]

Homebuilders kept developing land and building inventory well into the down slide 06-07. They believed had to - they needed to keep their entitlements, use their construction lines, and they believed they were better off with finished lots( vs. land) or houses (vs. finished lots). On the latter builders and banks belive you can monetize the investment better (even if you lose money for book, you can generate cash) if you finish inventory .

After they finished that spate, the real disinvestment started
Commercial is no different. If you have pulled you r permits, drawn the construction loan and started you can make a case that both you and your lender are better off finishing . THEN.....

Apr 02 12:58 PM

[Dean M:]

my company is pulling out of office space, we were the last tenant in a 50k sq ft building in a nice campus.

Apr 02 02:16 PM

[HardwoodFlo...:]

For Residential:

In discussions with contractors and others January was awful, there was a remodel pickup in February and, interestingly, March has seen a substantive boost.

New home construction is spotty and back to small jobs done by indivuals not big builders.

When I spoke to one contractor about the pick-up in remodel he explained it this way: "We have been quoting and quoting customers for the last 3 years. We had been getting very few jobs. We thought we were jsut high bid and that we were losing them to the competition. Well know all of those jobs are, for some reason, coming in."

Obviously, this is not home equity money nor is it new financing. People are spending their own cash on projects. Expect the redential spending numbers for March to be markedly up from here and then continue up until fall.

For Commercial.
In regards to the consistancy in commercial work- alot of this is residual from 2007 and 2008. Many jobs- schools etc.- are all planned when times are good. They go to the architect, then to bid then to contract then to spending. Expect this number to be decent through the summer then drop off in 2010.

Apr 02 05:11 PM

[reverse mor...:]

While there are certainly multiple factors, and I'm certainly not an expert on new home construction, America is being told by multiple advisers, start investing again. And while investing (perse) may not translate to new homes, the air of expectancy and looking toward the future recovery, is certainly in the air.

Obama promised change, but in order for that change to happen, we all have to be part of the solution.

Apr 02 07:12 PM

[Mad Hedge F...:]

No here. Yuba County, California, a semi rural area in the Sierra foothills commuting distance from Sacramento, has the highest underwater rate in the nation. There, 78% of all homes have larger mortgages than the houses are worth, and the numbers are rising. Four out of the five highest negative equity counties in the US are in the Golden State’s Central Valley.

Apr 03 10:22 AM