Construction spending in December exhibited sharply varied trends, with downturns from a year earlier in every private category, mixed results for public construction, and double-digit increases in residential construction, according to an analysis of new federal construction spending data by the Associated General Contractors of America. Association officials said the new figures demonstrate how the pandemic is boosting demand for new housing while undermining demand for most other types of construction projects.
“Private nonresidential construction has declined for six months in a row, and the slide is accelerating,” said Ken Simonson, the association’s chief economist. “While some categories of public construction have held up so far, state and local budget problems are likely to drive a downturn in public project starts in the next few months.”
Construction spending in December totaled $1.49 trillion at a seasonally adjusted annual rate, an increase of 1.0% from the pace in November and 5.7% higher than in December 2019. But the gains were limited to residential construction, which soared 3.1% for the month and 20.7% year-over-year. Meanwhile, private and public nonresidential spending fell 0.8% from November and 4.8% from a year earlier¬.
Private nonresidential construction spending slumped 1.7% from November to December and 9.8 from December 2019. All 11 private nonresidential categories in the government report declined from a year earlier.
The largest private nonresidential segment, power construction, fell 10.8% year-over-year despite a gain of 0.6% from November to December. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—slipped 1.4% year-over-year and 2.8% for the month. Manufacturing construction tumbled 17.6% from a year earlier and 5.6% for the month. Office construction declined 3.3% year-over-year despite edging up 0.2% in December. Healthcare construction fell 8.7% from the year before and 3.0% since November.
Public construction spending increased 3.0% year-over-year and 0.5% for the month. Results were mixed among the largest segments. Highway and street construction rose 3.9% from a year earlier and 0.9% for the month. Educational construction increased 4.5% year-over-year and 0.6% in December. But spending on transportation facilities declined 1.0% for the year despite a gain of 0.9% in December.
Private residential construction spending increased for the seventh-straight month, jumping 20.7 year-over-year and 3.1% in December. Single-family homebuilding leaped 23.8% compared to December 2019 and 5.8% for the month. Multifamily construction spending climbed 17.8% for the year and inched up 0.1% for the month.
Association officials said commercial construction was likely to suffer amid weakening demand unless Congress and the Biden administration enact new recovery measures, including backfilling local construction budgets and passing new infrastructure funding. They said the new federal investments were needed to sustain construction employment levels in many parts of the country until private sector demand recovers.
“Even as they work out details on the latest coronavirus relief plan, Congress and the Biden administration need to start work on measures to rebuild the economy and recover lost jobs,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the most effective ways to help the newly unemployed will be to rebuild aging infrastructure and maintain state and local construction budgets.”
Related Stories
Hotel Facilities | Apr 24, 2024
The U.S. hotel construction market sees record highs in the first quarter of 2024
As seen in the Q1 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics (LE), at the end of the first quarter, there are 6,065 projects with 702,990 rooms in the pipeline. This new all-time high represents a 9% year-over-year (YOY) increase in projects and a 7% YOY increase in rooms compared to last year.
Construction Costs | Apr 18, 2024
New download: BD+C's April 2024 Market Intelligence Report
Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.
Market Data | Apr 16, 2024
The average U.S. contractor has 8.2 months worth of construction work in the pipeline, as of March 2024
Associated Builders and Contractors reported today that its Construction Backlog Indicator increased to 8.2 months in March from 8.1 months in February, according to an ABC member survey conducted March 20 to April 3. The reading is down 0.5 months from March 2023.
K-12 Schools | Apr 10, 2024
Surprise, surprise: Students excel in modernized K-12 school buildings
Too many of the nation’s school districts are having to make it work with less-than-ideal educational facilities. But at what cost to student performance and staff satisfaction?
Multifamily Housing | Apr 9, 2024
March reports record gains in multifamily rent growth in 20 months
Asking rents for multifamily units increased $8 during the month to $1,721; year-over-year growth grew 30 basis points to 0.9 percent—a normal seasonal growth pattern according to Yardi Matrix.
Retail Centers | Apr 4, 2024
Retail design trends: Consumers are looking for wellness in where they shop
Consumers are making lifestyle choices with wellness in mind, which ignites in them a feeling of purpose and a sense of motivation. That’s the conclusion that the architecture and design firm MG2 draws from a survey of 1,182 U.S. adult consumers the firm conducted last December about retail design and what consumers want in healthier shopping experiences.
Market Data | Apr 1, 2024
Nonresidential construction spending dips 1.0% in February, reaches $1.179 trillion
National nonresidential construction spending declined 1.0% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.179 trillion.
Market Data | Mar 26, 2024
Architecture firm billings see modest easing in February
Architecture firm billings continued to decline in February, with an AIA/Deltek Architecture Billings Index (ABI) score of 49.5 for the month. However, February’s score marks the most modest easing in billings since July 2023 and suggests that the recent slowdown may be receding.
K-12 Schools | Mar 18, 2024
New study shows connections between K-12 school modernizations, improved test scores, graduation rates
Conducted by Drexel University in conjunction with Perkins Eastman, the research study reveals K-12 school modernizations significantly impact key educational indicators, including test scores, graduation rates, and enrollment over time.
MFPRO+ News | Mar 16, 2024
Multifamily rents stable heading into spring 2024
National asking multifamily rents posted their first increase in over seven months in February. The average U.S. asking rent rose $1 to $1,713 in February 2024, up 0.6% year-over-year.