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Construction spending increased for third straight month

January 5, 2011 - Government building projects helped boost total construction spending in November, and those moving into new homes might soon have a wider selection of homes to choose from as a result.

The Commerce Department reported that public residential construction spending increased 2.6 percent from October to November and 37.8 percent from a year earlier. Comparatively, spending on residential projects from the private sector climbed just 0.7 percent on a month-to-month basis and fell 5.3 percent from the previous year. In total, residential construction grew 0.7 percent from the previous month and overall construction climbed 0.4 percent in November.

It was the third consecutive month where total construction spending climbed, and it has now reached a seasonally adjusted annual pace of $810.7 million. Demand from consumers calling up moving companies and seeking new homes could push homebuilding out of its funk in 2011, though analysts had reserved expectations.

"It is too soon to tell if this sector, which has been in decline since March 2006, hit bottom in August 2010. If it did, a solid rebound is unlikely," said Patrick Newport, a U.S. economist with IHS Global Insight.

The Associated Press reported that government building could subside in 2011 as lawmakers work to curb spending and work down large budget deficits, meaning those relocating to new homes might have to increasingly rely on private development.
 

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