by Calculated Risk on 11/02/2009 10:26:00 AM

We started the year looking for two key construction spending stories: a likely bottom for residential construction spending, and the collapse in private non-residential construction.

It appears residential construction spending may have bottomed, although any growth in spending will probably be sluggish until the large overhang of existing inventory is reduced.

And the collapse in non-residential construction spending has started, and there will be further declines to come as projects are completed.

Click on graph for larger image in new window.

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending increased in September, and nonresidential spending continued to decline.

Private residential construction spending is now 62.2% below the peak of early 2006.

Private non-residential construction spending is still only 16.0% below the peak of last September.

The second graph shows the year-over-year change for private residential and nonresidential construction spending.

Nonresidential spending is off 15.4% on a year-over-year basis.

Residential construction spending is still off significantly from a year ago, although the negative YoY change will get smaller going forward.

Here is the report from the Census Bureau: September 2009 Construction at $940.3 Billion Annual Rate