Building Blues Continue
In 2003 and 2004, housing construction was one of the few sources of new jobs and new spending as the economy limped though its long, "jobless recovery" from the recession of 2001.
The situation is reversed today. This time, the housing business is an anchor around our necks as we try to climb out of recession.
Construction spending continued its fall in December, dropping 1.2 percent to a seasonal adjusted annual rate of 902.5 billion, according to figures released today from the U.S. Commerce Dept.Experts were hoping for better figures, or at least not as bad: Economists surveyed by Dow Jones Newswires estimated spending in December on construction would tumble 0.7 percent.
Spending on residential construction dropped even more quickly: by 2.8 percent in December, to a seasonally-adjusted rate of $260 billion a year. That's the largest decline since May. It's also down from $299 billion in December 2008.
Residential construction includes the construction of new houses (down 18 percent over 12 months); construction of apartments and condominiums (down 45 percent over 12 months); and improvements to existing housing, which made up more than half of the residential construction total.
Home construction will continue to provide little help to the economy over 2010, according to the Janaury 2010 Economic and Housing Market Outlook from Freddie Mac, though this year should be an improvement from 2009. Freddie Mac expects home starts to be 780,000 this year. That's better than 550,000 last year -- but still less than half the 1.8 billion homes started in 2006.