Construction spending in the U.S. on single-family homes declined in July for the fourth straight month as the housing market has entered a serious slump.
Construction spending on single-family homes fall by four percent, data from the Commerce Department showed Thursday. Spending is now just 2.9 percent above the year ago level.
The figures are not adjusted for inflation, which means the real declines in construction activity are even steeper. Prices of materials and components for construction rose 0.3 percent compared to the prior month, according to the Labor Department’s Producer Price Index. Compared with a year ago, prices are up 14.3 percent. Prices of construction services in the private sector rose 5.4 percent in July compared with June. For the year, prices are up 25.3 percent.
In other words, inflation-adjusted construction spending on single family homes is down double digits and perhaps by as much as 25 percent.
Housing starts, reported by the Commerce Department on August 16, have fallen every single month since February. During those five months, starts are down by 24.5 percent. Starts dropped 9.6 percent in August compared with the prior month.
The nosedive in spending on single-family homes brought down overall residential construction by 0.4 percent. Total construction spending fell by 0.4 percent after falling 0.5 percent in June. The June figure was revised upward from a 1.1. percent decline reported last month.
Private spending on nonresidential construction—which often responds to financial and economic conditions with a lag due to longer-term contracts, increased 0.4 percent. Most categories of private nonresidential spending rose, with the exception of health care, sewage, and water.
Total public construction spending rose 1.5 percent.
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