Construction spending drops by record 2.6%

The number of residential projects in the U.S. is decreasing. The decrease is a result of decrease of the residential projects by the private companies. Private companies residential properties projects have dropped 18.3 percent.

The drop in residential properties is the highest since 1994. Spending on construction has reduced by 2.6 percent.

The private parties are reducing their construction activities because the market is down. Construction companies are cutting back on their projects so as to keep themselves away from too much of inventory and to save themselves from loss.

Let’s see the figures of Construction

• 2007          -2.6%
• 2006         +5.3%
• 2005         +10.6%

This 2.6% is a record in itself. The last record was 1% in 2002. The record decline of 18.3% is higher than the previous decline of 4.3% in 1994.

In December the decline was 1.1% whereas in November the decline was 0.4%.

As the home prices are going down and at the same time the home sales is also going down, so companies are reluctant to take any risk. Their behavior is causing all these problems of decline in spending as well as decline in total property projects. At the same time government has also reduced the spending on building projects.

Government reduced the spending on building project in December. The reduction was 1.5% for the public works. In November 1.3% rise was there in spending. In December the private builders spending on the commercial projects increased by 1.3%. The same spending had a rise of 1.8% in November.