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Home Building Up, BUT construction overall is down.

January 3, 2013

According to USAToday.com

WASHINGTON (AP) — Spending on U.S. construction projects fell in November from October because a huge reduction in federal projects offset another gain in home building. Construction spending overall down slightly 0.3% in November, the Commerce Department said Wednesday. It was the first decline since March and followed a 0.7% increase in October, which was revised lower from an earlier estimate of 1.4%. Total spending declined to a seasonally adjusted annual rate of $866 billion. That is 16.1% above a 12-year low hit in February 2011. Even with the gain, the level of spending remained only about half of what’s considered healthy.

isle of palms-construction-real-estatePaul Ashworth, chief U.S. economist for Capital Economics, said the decline in construction spending was “nothing too much to worry about.” “This is a volatile series month to month,” Ashworth said. “The recent surge in housing starts suggests that residential construction spending will expand at a fairly rapid pace this year.

Spending on commercial construction projects dropped 0.7%. Spending on office buildings, hotels and shopping centers declined. Overall government spending dipped 0.4%. A separate report last month showed that Charleston home builders broke ground on fewer homes in November after starting work at the fastest pace in more than four years in October. Housing starts are on track for their best year in four years. A separate report last month showed that builders broke ground on fewer homes in November after starting work at the fastest pace in more than four years in October. Housing starts are on track for their best year in four years. Strength in home building has been one of the bright spots for the economy this year. But overall construction is still being offset by weakness in commercial real estate and tight state and local government budgets.

Sales of new homes rose 4.4% in November to the highest annual pace in two and a half years. Charleston new-home sales, very much like the rest of the U.S. are more than 15% higher than a year ago.

From July through September, residential construction grew at an annual rate of 13.5%. Housing construction is on track to contribute to economic growth this year, the first time that has happened in the five years since the housing bubble burst.

Though new homes represent only a fraction of the housing market, they have an out-size impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the National Association of Home Builders. Builders are increasingly confident that the housing recovery will stay strong.

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