by Calculated Risk on 10/01/2009 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. This report shows further evidence of both stories.

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 August, and nonresidential spending continued to decline.

Private residential construction spending is now 63.1% below the peak of early 2006. Although it appears residential construction spending may have bottomed, any growth in spending will probably be sluggish until the large overhang of existing inventory is reduced.

Private non-residential construction spending is still only 12.6% 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 10.5% on a year-over-year basis, and will turn strongly negative as projects are completed. Residential construction spending is still declining YoY, although the negative YoY change will get smaller going forward.

From the Census Bureau: August 2009 Construction at $941.9 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2009 was estimated at a seasonally adjusted annual rate of $941.9 billion, 0.8 percent (±1.8%) above the revised July estimate of $934.6 billion. The August figure is 11.6 percent (±1.8%) below the August 2008 estimate of $1,066.1 billion.