US construction spending falls in August on single-family homebuilding
US CONSTRUCTION spending unexpectedly fell in August amid a sharp drop in outlays on single-family housing projects, but declining borrowing costs could stimulate activity in the months ahead.
The Commerce Department’s Census Bureau said on Tuesday (Oct 1) construction spending dipped 0.1 per cent after a downwardly revised 0.5 per cent drop in July. Economists polled by Reuters had forecast construction spending would edge up 0.1 per cent after a previously reported 0.3 per cent decrease.
Construction spending increased 4.1 per cent on a year-on-year basis in August.
Spending on private construction projects slipped 0.2 per cent in August after declining 0.7 per cent in July. Investment in residential construction fell 0.3 per cent with outlays on new single-family projects slumping 1.5 per cent.
The rising supply of new homes on the market is discouraging builders from breaking ground on new housing projects.
That, together with buyers holding out for lower mortgage rates could, in the near term, limit the boost from declining borrowing costs. The Federal Reserve last month cut interest rates for the first time in four years. The US central bank is expected to reduce rates again in November and December.
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Mortgage rates are at two-year lows, while the inventory of new homes is at levels last seen in early 2008.
Spending on multi-family housing units fell 0.4 per cent. But spending on home renovations increased.
Investment in private non-residential structures like offices and factories dipped 0.1 per cent.
SEE ALSO
Spending on public construction projects advanced 0.3 per cent after rising 0.5 per cent in July. State and local government spending rose 0.3 per cent and outlays on federal government projects increased 0.5 per cent. REUTERS
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