US Construction Spending Up, Housing Rebound Expected to Continue in 2020
Spending on U.S. construction projects rose a solid 0.6 percent in November as gains in home building and government projects offset weakness in nonresidential construction.
It was the fifth consecutive monthly gain and a sharp improvement from a tiny 0.1 percent October advance, according to a Commerce Department report Friday.
The acceleration was led by a 1.9 percent rise in home construction that was more than double the 0.7 percent October increase.
Spending on government projects rose 0.9 percent in November as both activity at the federal level and state and local levels increased.
Single-Family Starts Rebound Continues in November #realestate #housing #builders https://t.co/sQyThIq3DJ pic.twitter.com/G8R44eOZoo
— Dan Rivisto (@DanRivisto) January 2, 2020
Spending on private sector nonresidential projects fell 1.2 percent, the biggest drop since April, reflecting widespread weakness with hotel construction down 3.8 percent and manufacturing down 2.4 percent.
Lower mortgage rates and a healthy job market have boosted home building.
The average national rate for a 30-year fixed-rate mortgage dipped to 3.72 percent this week, down significantly from a year ago when the 30-year mortgage was at 4.51 percent.
At this time a year ago, the Fed had wrapped up a year when it had boosted interest rates four times.
However, in the face of rising global weakness and headwinds generated by a U.S.-China trade war, the Fed switched from hiking rates to cutting its benchmark rate three times last year, giving a boost to financial markets and interest-sensitive sectors such as housing.
The gain in home building reflected a 1.2 percent rise in single-family construction, offsetting an unchanged reading for the smaller apartment sector.
The rebound in housing is expected to continue in 2020.
Americans signed more contracts to purchase homes in November, a rebound from the previous month, indicating that the housing market is still strong.https://t.co/9nlteD3TUx
— PBS NewsHour (@NewsHour) December 30, 2019
Application for new building permits, seen as a good indicator of future activity, jumped in November to the highest level in more than a decade.
The 0.9 percent increase in government construction reflected a 1.7 percent rise in spending by the federal government and a 0.8 percent increase in spending by state and local governments.
The Western Journal has reviewed this Associated Press story and may have altered it prior to publication to ensure that it meets our editorial standards.
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