WASHINGTON (Reuters) – U.S. construction spending rose more than expected in October, boosted by construction of single-family homes.
The Commerce Department’s Census Bureau said Monday that construction spending rose 0.4%, following an unchanged 0.1% increase in September. Economists polled by Reuters had forecast construction spending would rise 0.2%. Construction spending rose 5.0% year-on-year in October.
Spending on private construction projects increased by 0.7%. Investments in residential construction increased by 1.5%, while expenditure on new single-family projects increased by 0.8%. The increase occurred despite mortgage rates completely reversing the decline that had brought them to a more than six-month low of 6.08% in late September, after the Federal Reserve began cutting rates .
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The average rate on a 30-year fixed-rate mortgage rose to 6.72% at the end of October, reflecting a rise in 10-year U.S. Treasury yields, which have risen on strong domestic data that point to a slower path from interest rate cuts from the US central bank.
The inventory of new homes for sale is at levels last seen in early 2008, which could limit gains in single-family home construction. Spending on multi-family housing increased by 0.2%. Spending on home renovations also increased.
Housing spending, including home construction, has held back the economy for two quarters in a row.
Investments in private, non-residential structures such as offices and factories fell 0.3%, due to declines in commercial, healthcare, education and entertainment and recreational facilities.
Spending on public construction projects fell by 0.5% in October. State and local government spending fell 0.6%, more than offsetting a 0.3% increase in spending on federal government projects.
(Reporting by Lucia Mutikani; Editing by Andrea Ricci)
