Construction Spending Edges Up as Builders Maintain Caution

Construction spending took two steps forward and one step back in March, hiking up slightly from a downwardly revised February estimate.

According to figures released Thursday by the Commerce Department, total construction spending in March bumped up 0.2 percent to an estimated adjusted annual rate of $942.5 billion. Compared to a year prior, March spending was up 8.4 percent.

In the private sector, construction spending was put at an estimated rate of $679.6 billion, with residential projects accounting for $369.8 billion of that total. Outlays for both single- and multifamily building were up, though growth was still sluggish in single-family compared to multifamily construction (a 0.2 percent monthly increase versus 4.4 percent).

On the public side, spending on residential construction was down, dropping 6.6 percent from February.

The slight increase in overall residential outlays fits with a similarly small pickup in homebuilder confidence. The National Association of Home Builders’ Housing Market Index, a measure of builder sentiment regarding the single-family market, has remained below the neutral line for most of this year, indicating a view slightly more negative than positive.

Continuing in that theme, government data for March points to a slight increase in housing starts over the month, though groundbreaking continues to fall short of expectations.