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August Construction Report Shows Housing is Back

The data on construction show how home construction is contributing to economic growth.

Monday’s release of construction spending for August looked like yet another piece of grim economic news. It was a second straight month of decline, a .6 percent drop that was far below economists’ expectations of a .5 percent rise. The numbers within the number, which includes government and private residential and nonresidential construction projects, weren’t too pretty either. Private nonresidential construction was down 1.7 percent, and public construction was down .8. But what about private residential construction? Housing is still back, baby.

This chart shows annualized monthly private residential-construction spending—basically, home construction. Over the month, it bumped up .9 percent to $273.5. Although this isn’t close to its March 2006 peak of $676.4 billion, it is the highest monthly level of construction spending since January 2009, when it hit $274.6 billion. Since August 2011, private residential construction is up about 15 percent, an increase of more than $41 billion.