Residential real estate construction spending drops

The rate of private residential construction spending dropped 3 percent in July compared to July 2005, the U.S. Census Bureau of the Department of Commerce announced today, and fell 2 percent since June 2006.

Meanwhile, the seasonally adjusted annual rate of total construction spending reached $1.2 trillion in July, which is about 1.2 percent below the revised June estimate and about 5.1 percent above the July 2005 estimate.

Non-residential construction spending was at a seasonally adjusted annual rate of $303.5 billion in July, which is 0.3 percent above the revised June estimate of $302.7 billion.

The seasonally adjusted annual rate is calculated as a projection of a monthly total over a 12-month period, adjusted for seasonal fluctuations in construction activity.

During the first seven months of this year, construction spending amounted to about $680.4 billion, which is 8 percent above the $630.2 billion for the same period in 2005.

Spending on private construction was at a seasonally adjusted annual rate of about $930.9 billion, which is 1.3 percent below the revised June estimate of $943.2 billion.

The estimated seasonally adjusted annual rate of public construction spending in July was about $269.1 billion, or 0.7 percent below the revised June estimate. Educational construction spending was at a seasonally adjusted annual rate of about $69.9 billion in July, up 1 percent from the revised June estimate. Highway construction was at a seasonally adjusted annual rate of about $76.6 billion, which is 0.6 percent below the revised June estimate of $77 billion.

Month-to-month changes in seasonally adjusted statistics often show irregular movements, the agencies noted. It may take two months to establish an underlying trend for total construction and as long as eight months for specific categories of construction, according to the announcement.

Statistics are estimated from several sources and surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and under-coverage. Current statistics in the report are preliminary estimates subject to revision in following months.

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