Residential construction slips 4.1% in December
Figures released by the U.S. Department of Commerce on Feb. 1 showed continued low levels of construction spending on both residential and non-residential projects during the month of December 2010. Overall spending on private construction fell 2.2% from November, with residential construction slowing at 4.1% and non-residential construction at 0.5%.
In year-end figures, $507.3 billion was spent on private construction in 2010, 14.3% below the $592.3 billion spent in 2009. Residential construction in 2010 was $241.4 billion, 1.7% below the 2009 figure of $245.6 billion. Spending on non-residential construction was $265.9 billion in 2010, 23.3% below the $346.7 billion spent in 2009.
Survey points to a not-so-big house of the future
The single-family home is getting smaller. Three-bathroom houses are on the decline. And most builders think the living room will merge or vanish by the year 2015.
Those were some of the findings shared by the National Association of Home Builders (NAHB) at the 2011 International Builders’ Show, during a seminar called “The New Home in 2015.” In one word, homes will be “smaller,” according to the survey data.
The average size of a new single-family home completed in 2010 declined from 2,438 sq. ft. to 2,377 sq. ft. And looking forward, builders are already expecting smaller homes in 2011.
Smaller homes this year are expected by 52% of builders surveyed, compared with only 7% who expect larger homes in 2011. Lower-priced models are also in the pipeline — 59% of builders will build lower-priced models, compared with 7% who will build high-priced models.
The following expectations for 2015 came from a 2010 builder survey, and are compared with the home of the future survey from 2007.
The NAHB presentation also reported the following:
• Homes with three or more bathrooms declined in 2009 from 28% to 24%. The figure remained at 24% in 2010.
• Homes with three-plus-car garages peaked in 2005, and has been on a downward trend since. These garages are in about 17% of completed homes in 2010.
• More than half — 52% — of respondents believe the living room will either vanish or merge with other home spaces by 2015.
Pending home sales continue to climb in December
Pending home sales improved again in December, making this the fifth gain in the past six months, according to the National Association of Realtors.
The Pending Home Sales Index, a forward-looking indicator, increased 2.0% to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2% below December 2009, when it was 97.8.
“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” said Lawrence Yun, NAR chief economist. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.
“The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, are highly unlikely this year.”
The PHSI in the Northeast increased 1.8% to 73.9 in December but is 5.3% below December 2009. In the Midwest, the index rose 8.0% in December to 84.6 but is 5.1% below a year ago. Pending home sales in the South increased 11.5% to 101.9 and are 1.7% above December 2009. In the West, the index fell 13.2% to 105.8 and is 10.7% below a year ago.
The data reflect contracts and not closings, which normally occur with a lag time of one or two months.