Construction spending has come a long way since the financial crisis hit America, according to a report from the U.S. Census Bureau. Recent reports have shown that increasing demand and low inventory levels are fueling home prices and are likely the driving factor of the uptick in construction spending.
Month-over-month, construction spending in December 2015 was at an annual rate of 1 point 117 trillion dollars, up 0 point 1 percent from November's estimate of 1 point 116 trillion dollars. Year-over-year the December 2015 construction spending is up 8 point 2 percent from the previous year's estimate of 1 point 031 trillion dollars. Spending in the construction sector rose to 1 point 097 trillion dollars in 2015, up 10 point 5 percent from 2014's total expenditures of 993 point 4 billion dollars and the highest yearly level since 2007, when spending stood at 1 point 148 trillion dollars.
The formation of new households in the U.S. were disappointing to say the least for the final quarter of 2015, but Capital Economics says that this news is no reason to panic. The U.S. Census Bureau recently reported that household formation rose by 462 thousand year-over-year for the fourth quarter of 2015, the smallest increase on record since the second quarter of 2010. Capital Economics believes that housing demand will trump supply troubles and encourage homebuilders to meet buyers' needs and boost home prices.