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Construction Spending Hits 3-Year High

By Eric Jay Toll for The Arizona Builder’s Exchange

Nationally, construction spending hit the highest level in three years with increased spending on multifamily and residential projects driving the recovery. A continued downturn in public sector spending is keeping the market fragile and fragmented according to the Associated General Contractors of America. Despite the disruption of Hurricane Sandy, however, AGC economists expect the upward trend to continue.

Although construction activity nudged up less than one percent from August, the 7.8 percent increase over last year is the highest gain since 2009. Annualized, construction spending nationally will top $850B. Arizona alone cleared $9.5B for its fiscal year ending June 30, a 6.2 percent increase over the prior fiscal year. Although activity has been increasing, AGC still calls the market shaky without steady increases from public construction.

Nationally, some categories showed decreases not only from August, but also when compared to September a year ago. Private non-residential construction slipped slightly into negative numbers, down one tenth of one percent. Public construction dropped almost 1 percent when compared to August, and down nearly 5 percent when compared to September 2011.

New private multifamily soared 49 percent over 2011, says AGC economist Ken Simonson. Single family construction was up 26 percent over last year. In Arizona, Jim Belfiore, president of Belfiore Real Estate Consulting says that residential construction starts are up 80 percent over 2011, a trend he expects to continue into 2013.

Commercial construction was down 3.8 percent from August, but showed a 4.4 percent gain over last September. Public construction was down 2.4 percent year-over-year and education construction was down nearly 7 percent when compared to September 2011.

Read the original news release at AGC

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