Looks Like a Bottom for Residential Construction Spending

This is old news (latest data released yesterday covered September), but it highlights again the likelihood that residential construction spending has hit bottom. Meanwhile, nonresidential construction continues to be soft. I imagine we'll see this pattern persist for some time, with strength in residential construction offsetting weakness in the nonresidential area. What it will amount to is a huge, multi-year shift in the economy's resources away from nonresidential construction and back to residential construction.

The current pace of residential construction is much less than what is required to meet a growing population; sooner or later, the excess inventory of homes—now declining—will collide with growing numbers of households look for homes, and the result will be a significant increase in residential spending.

Comments

[concrete guy:]

Let's hope it's sooner. The inventory of new homes (as measured per million population) is at an all-time record low. Now if we could back to normal lending, and see some improvement in the unemployment situation, we would see a considerable bounce in residential construction spending.

Nov 03 09:19 AM

[Can'tSpotAB...:]

You've called the bottom many times before with regard to housing, so I must take your post with a grain of salt. You never really know a bottom until you are several quarters past it.

Nov 03 06:30 PM

[Kin Tsui:]

The author just said "Looks Like A Bottom" and "the likelihood that residential construction spending has hit bottom", we don't know what he really mean is A Bottom This Year or A Bottom since the decline from 2006.


On Nov 03 06:30 PM Can'tSpotABubble? wrote:

> You've called the bottom many times before with regard to housing,
> so I must take your post with a grain of salt. You never really know
> a bottom until you are several quarters past it.

Nov 04 08:12 PM