Residential Construction Spending Sees July Upswing

Construction spending made a promising comeback in July with an 8.2 percent jump from last year, according to the Census Bureau.

Total construction spending, both private and public, surged to a seasonally adjusted annual rate of $981.3 billion, up from $906.6 billion in July last year.

For private residential construction, the numbers reflected a 7 percent boost year-over-year, eclipsing new home data in June at a seasonally adjusted annual rate of $358.1 billion.

That continues one of the strongest ongoing upswings for residential construction spending since the financial crisis rocked markets and sent construction into a tailspin.

Residential construction spending peaked earlier in July this year at a seasonally adjusted annual rate of about $364 billion, the biggest increase since spending began to fall in May 2008.

The good news for construction spending sounds just as homebuilders saw new construction ride a 15.7 percent swell in July from estimates made for the previous month.

Builder confidence similarly ticked up 2 percentage points in August, according to the National Association of Home Builders.

But not everyone shares the optimism that the boosts in homebuilder confidence and construction spending would seem to convey.

Writing about a housing survey for Fannie Mae, Doug Duncan, chief economist for the mortgage giant, cautioned last month that so-so employment gains and slipping home prices could mean some dampening for the recovery.

"The continued cautious sentiment expressed across the range of consumer indicators this month gives weight to our view that the first phase of the housing recovery is decelerating," Duncan said.

He added that the deceleration would make 2014 "a year of mixed housing outcomes."