Homebuilding Outlays Mixed in June

According to the latest figures released Friday from the U.S. Census new home sales, starts, and spending were down in June and for the first half of the year.

Spending on private construction in June came in at a seasonally adjusted annual rate of $685.5 billion, 1 percent below the revised May estimate of $692 billion. Residential construction alone was at $356 billion, which is 0.3 percent below the revised May estimate. Nonresidential construction was 1.6 percent lower.

Public construction projects overall showed an even more dramatic shortfall. In June, the Census Bureau found, public construction spending overall was $264.7 billion, or 4 percent shy of the revised May estimate of $275.7 billion. However, public construction starts for residential buildings did improve. Spending here was $5.4 billion, about 6 percent higher than the revised May estimate of $5.1 billion.

Still, as most residential construction projects are performed by private companies, news that construction is slow despite the public's growing optimism in the housing market is somewhat confounding.

One explanation could be the dearth of workers in the residential construction field. The National Association of Home Builders earlier this year noted the shortage of workers in the construction industry as a major challenge for builders and a main cause of slow housing starts.

In April, the Associated General Contractors of America (AGCA) reported that as many as 2 million construction workers who'd lost their jobs when the economy bottomed out have either retired or found other employment and would not refill the now-growing number of construction openings. However, the AGCA also found that unemployment rates for construction workers that month had hit their lowest numbers since the depths of the recession in 2010.

Another reason could be that optimism is not as high as some expect. Last month's U.S. Economic and Housing Outlook from Freddie Mac reported that housing starts for June fell by 9.3 percent from the May pace. Freddie blamed the slowdown on the eroding confidence of the American people in the direction the economy is heading.

Whatever the cause, the drop in housing spending, after several straight months of promise and growth, indicates that we're still not in the clear where economic recovery is concerned.