August 2010 construction data showed that new home construction declined by 0.3% compared with July. Residential property construction recorded an annual rate of over $230 billion as of August. The August decline marks the fourth month that the sector has recorded drops in activities since May when the tax credit initiative reached its deadline.
Although residential building activities are down for the month, total construction spending for August jumped by 0.4%, mainly due to government construction projects. According to the U.S. Commerce Department, the increase in construction spending came right after a 1.4% decline recorded in July 2010. The department also revealed that activities in government building were high enough to offset the continuous decline of private construction.
Spending for government construction projects increased by 2.5% in August, while private construction spending declined to its lowest range within a 12-year period. According to government housing officials, construction industry weakness has contributed to the economic downturn and they expect the problem to persist for the rest of the year despite increased spending for August.
Real estate analysts have stated that increased activity in the government building sector will not be able to sustain the whole construction industry, given that new home construction and commercial property construction are both lagging behind. Overall private construction activities also recorded their fourth successive decline in August. The sector posted a 0.9% drop compared with July and had a yearly rate of $498.2 billion which is considered the slowest pace for the segment since January 1998.
Real estate industry observers have reported that the housing construction sector has received some boost from the federal government's tax credit program, albeit temporarily. When the program's deadline came, home construction dropped considerably and most industry experts are not expecting it to rebound any time soon.
The construction industry is also not helped by the continuous weakness in commercial building activities. Spending on commercial or nonresidential private projects declined by 1.4% for August and recorded an annual rate of over $250 billion. Lack of activities in the shopping center, hotel and office building segments, along with minimal projects within the new home construction sector, are blamed for the poor performance of private construction business.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
Notice: In accordance with FTC guidelines, we state that RealEstateProArticles.com has financial relationships with some companies and may be compensated if consumers choose to buy, subscribe or take any action to a product or service via the links on our website. Occasionally, we receive free access to review a product or service. We do not accept compensation in exchange for a positive review. These reviews are strictly the opinions of the author.
![[Valid RSS feed]](http://www.realestateproarticles.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print This Article
Add To Favorites
