Nonresidential Housing Accelerates in April

April’s increase in nonresidential construction spending nearly offset a slowdown in single-family home building and improvements, according to Ken Simonson, chief economist of the Associated General Contractors of America (AGC), an Arlington, Va.-based construction trade association.

Simonson was commenting on the most recent U.S. Census Bureau report on April construction spending, which reported construction spending was estimated at a seasonally adjusted annual rate of $1.196 trillion, down 0.1 percent from March.

The April total was 8.5 percent higher than in April 2005.

“Looking at the first four months of 2006 combined, actual spending was 8.9 percent higher than in the January-April 2005 period,” says Simonson. “Private nonresidential construction was up 10.8 percent year-to-date, public construction gained 9.7 percent and private residential spending was 7.8 percent stronger.”

However, according to Simonson, the apparent decline in residential construction is limited to improvements, which dropped 10 percent, and not a slowdown in new single-family or multi-family building, which are up 13 and 19 percent, respectively.

Simonson says that among major private nonresidential construction categories, manufacturing and “multi-retail” shopping centers—shopping malls and general merchandise stores—stand out, with year-to-date increases of 22 and 37 percent, respectively.

The two largest categories of public construction—educational and highway and street construction—posted year-to-date increases of 11 and 12 percent.

“The strong economy should keep boosting nonresidential construction, even though materials cost increases are causing some projects to be redesigned, deferred or canceled,” Simonson says.