Austin Real Estate Blog

The United States Department of Commerce reports that overall construction spending has declined in May of 2008 by four tenths of a percent. Residential construction rates went down 1.6 percent in May, the same decline as in April. Non-residential construction rose slightly at three tenths of a percent, slightly less than the eight tenths rise in April.

Private construction rates fell seven tenths of a percent in May while public construction rose slightly at four tenths of a percent. This is after an unchanged rate in private construction and a slight fall of three tenths of a percent for public construction for April.

Home builders are understandably reluctant to start new construction while the market for new homes remains so soft. Also, the incidence of foreclosures continues to rise, putting more inventory on the market and making it that much harder to sell current houses.

Construction firms are putting their money into building hotels, motels and office space rather than the residential area. The home construction rate hit a 17 year low in May, with a seasonally adjusted rate of 975,000, compared with April’s start of a little over 1 million. Single family home starts came in at 674,000. Building permit applications came in at 969,000 in May, which is actually a little better than the 950,000 economists had been predicting.