Construction Spending Turns Down in August

Spending on construction activity dropped unexpectedly in August, with a stall in homebuilding contributing to the decline.

In a report on Wednesday, the Commerce Department estimated construction spending for the month of August was at a seasonally adjusted annual rate of $961.0 billion, a decrease of 0.8 percent from July’s revised estimate of $968.8 billion.

Overall, spending on residential projects was down 0.1 percent over the month to an annual rate of $357.2 billion, the government reported. The drop included a 0.1 percent falloff in private homebuilding from July, though the much smaller public residential construction category saw a 3.3 percent increase.

The drop in spending on new home construction jibes with preliminary Census reports of a 14.4 percent month-over-month drop in housing starts in August, including a 2.4 percent decrease in single-family units.

Despite the dip in activity, measures show builder confidence in the market continues to rise, with strength anticipated for future sales numbers.

For August, new home sales were at an estimated annual rate of 504,000, the highest rate of sales since May 2008. However, critics argue that monthly numbers are too volatile to draw a solid conclusion from, as evidenced by a similar surge in May that was later revised to a more modest figure.