According to GE Capital’s 3rd Quarter 2013 Construction Update, housing construction continues to experience a steady recovery, but at a slower pace than Q1. Reflecting uncertainties about future Fed policies on rates, the housing sector lost some momentum gained during last few quarters.
Selected Highlights From the Update:
- Total construction spending averaged $884B in 2Q13,a rise of 2% over Q1/13.
- Nonresidential building construction put in place fell -3.4% year-over-year in 2Q13 and fell -1.4% from 1Q13, indicating the decelerating growth of the sector. The shrinkage in private nonresidential construction spending was mainly attributed to decline in the manufacturing, education, religious, public safety and amusement and recreation categories.
- According to MAPI, private non-residential spending is projected to grow by 1.3% in 2013 and by 5.5% in 2014.
- 30-year mortgage rates rose strongly following indications the Fed will begin tapering their purchases of long-term bonds. Higher rates have hurt home sales, which fell 13.4% in July from the previous month.
- Total housing starts fell almost -9% in Q2/13 from Q1/13. Further, single-family starts also fell -5% in Q2/13 from Q1/13.
- Home prices continued to strengthen and rose at an annual rate of 12% in June as measured by the Case-Shiller 20 City Home Price Index. Tight supply is expected to continue to support the price increase.
To read the full 3rd Quarter 2013 Construction Update, click here.