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November 05, 2005

housing construction loses steam

 



 in my new role

as wind indicator ,,,,

================================


 nyt



"THE building of houses,

 which buoyed the American economy 

during the 2001 recession 

and then spurred the recovery,

 is no longer leading the economy up "

 

"Fading Boom Figures released this week

 by the Commerce Department

 showed that private construction spending 

set a record in September

 but the third-quarter average 

was only 6.5 percent above

 the figure in the quarter a year ago

 before adjusting for inflation" 

That matched the growth

 of the overall economy

 By contrast

 in 2004 residential construction spending 

was growing twice as fast as the overall economy

While home builders were raking in the money

 other areas of construction 

were not nearly as strong

 The most drastic change 

was in office construction

 which set a record in December 2000

 when spending hit

 a seasonally adjusted annual rate

 of $58 billion

 By early 2003

 the rate had fallen more than half

 and 

most of that lost ground 

has not been made up"

"A result has been a fundamental shift

 in the proportion 

of private construction spending 

going to building homes and apartments

 The proportion fluctuated around 60 percent

 of total spending for years

 but now it is around 70 percent"

" That makes the economy 

potentially more vulnerable 

than it usually is 

if housing construction 

were to decline sharply"

- -------- the amount

of housing construction as share 

of the economies growth  yes



 but the  intra sectoral

   proportion..nonsense

commercial/ office/ industrial construction

 is far more volitile

if not so interest sensitive--------------

"By contrast, office buildings 

now account for a little more than 

4 percent of the private construction budget

 half what they accounted for in 2000"

------------ see what that number really shows ???

office building is boom and bust ---------

 "Commercial building, of stores and malls, 

has not suffered as much, 

but it has lost a quarter 

of its market share "

"manufacturing construction's share 

of the total construction pie

 above 9 percent a decade ago

 fell to 3 percent

but has now stabilized 

and even begun to edge up

 In dollars, September spending

 was at an annual rate

 of $27.6 billion

 up almost 40 percent 

from the low reached in February 2003"

An area with little sign of a turnaround is 



" Spending on communications sites

 has stabilized

 but power plant spending 

in September reflected an annual rate

 of $22.6 billion

 the slowest pace since early 2001

 Over all

 the utility share

 of private construction spending 

is down to 4.2 percent

 the lowest since the government

 began collecting such figures in 1993."



There has been widespread talk of a cooling in the housing market, and mortgage applications have slowed in recent weeks - possibly an indicator of slower sales to come. But while 



"spending on residential construction 

was  rising at 20 percent

            a year ago"