WASHINGTON (Reuters) – US building spending rose more than expected in December, stimulated by single -family homes, but high mortgage interest rate could curb further profit in the new residential construction.
The Census Bureau of the Commerce Department said on Monday that construction increased by 0.5% after an upward revision of 0.2% in November. Economists surveyed by Reuters had predicted that the building spending would take place 0.2% after they had been reported unchanged earlier in November.
The construction expenditure rose by 4.3%in December on an annual basis. It went 6.5% in 2024.
Expenditure on private construction projects shot 0.9%. Investments in residential construction rose 1.5%, with expenditure for new single -family projects by 1.0%. New construction has been obstructed in recent months by increasing mortgage interest rate, which compensated for the hope among builders for less strict regulations of the government of President Donald Trump.
The mortgage interest rate has risen together with the American treasury income in the field of economic resilience and investors are concerned that the trade and immigration policy of the new administration could pass the inflation and the scope of the Federal Reserve this year could limit to reduce the interest rates.
The US Central Bank started its policy scal cycle in September, reducing the rates with 100 basic points before he paused in January. The FED increased its policy percentage in 2022 and 2023 by 5.25 percentage points to tame an increase in inflation. Trump hit 25% rates on Canadian and Mexican goods on Saturday. The rates aimed at Canada can make wood more expensive and new houses less affordable.
Expenditure on Multi-Family homes went with 0.3% in December. Expenditure on home renovations have increased.
Investments in private non-residential structures such as offices and factories deposited by 0.1%in December.
Expenditure on public construction projects fell by 0.5%in December. Expenditure on national and local government fell by 0.5%, while expenditure for federal government projects fell by 0.2%.
(Reporting by Lucia Mutikani; adaptation by Paul Simao)