Residential Construction Slips Another 4 Percent in October

Residential construction declined by 4 percent in October, matched by moderate declines compared to September in nonresidential building and non-building construction, according to a November 29 report from McGraw-Hill Construction, a division of The McGraw Hill Cos.

Through the first 10 months of 2006, total construction on an unadjusted basis came to $567.4 billion, up 0.5 percent compared to last year.

“The primary reason for this year’s slowing pace of construction starts has been the sharp pullback by single-family housing,” says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, in the report. “The slide for single-family housing grew pronounced in late spring, and it’s been followed by a further loss of momentum through October.”

Single-family housing retreated 4 percent, and has now seen weaker activity for nine straight months. On a year-to-date basis, single-family housing during the January to October period of 2006 dropped 11 percent in dollar volume, reflecting this regional pattern—the Midwest, down 19 percent; the West, down 18 percent; the Northeast, down 13 percent; the South Atlantic, down 9 percent; while South Central ran counter with a 6 percent gain.

“Diminished price appreciation has significantly dampened investment-related housing demand; furthermore, potential buyers are right now waiting for home prices to fall further, while sellers are still coming to terms with the changed environment,” Murray explains.