Spending on construction activity dropped unexpectedly in August, with a stall in homebuilding contributing to the decline.
In a report [1] on Wednesday, the Commerce Department [2] 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 [3] in August, including a 2.4 percent decrease in single-family units.
Despite the dip in activity, measures show builder confidence [4] in the market continues to rise, with strength anticipated for future sales numbers.
For August, new home sales [5] 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.