Construction Spending Up Slightly in September as Housing Picks Up Steam

Construction spending rose 0.6 percent in September to its highest level since 2009, the ""Census Bureau"":http://www.census.gov/ reported Thursday.

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Spending during the month was estimated at a seasonally adjusted annual rate of $851.6 billion, up from the revised August estimated of $846.2 billion. The September figure is up 7.8 percent year-over-year from September 2011's estimated $790.3 billion, the Census Bureau reported.

Private residential construction posted a 2.8 percent gain from August, rising to $285.9 billion in September. That improvement was mostly driven by single-family building, which rose 3.9 percent as low mortgage rates spurred increased demand for new homes. New multi-family construction also saw an increase, improving 1.8 percent.

On an annual basis, private spending on housing construction was up 20.9 percent, with spending on single-family construction seeing a 25.7 percent increase and multi-family construction getting a dramatic 48.9 percent boost.

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Sharp rises in spending on communications (7.0 percent), transportation (5.7 percent), and manufacturing (3.8 percent) weren't enough to bring up the private nonresidential category, where spending fell 0.1 percent month-over-month. Year-over-year, however, spending was up 8.8 percent.

In total, private construction spending increased 1.3 percent month-over-month.

Residential spending was down in public sector, falling 1.5 percent from August and 26.1 percent from September 2011. Spending on public residential construction was around $6.3 billion.

Public nonresidential spending also dipped, falling to about $264.8 billion (down 0.8 percent from August and 3.6 percent year-over-year). The amusement and recreation sub-sector reported a 7.5 percent improvement in construction spending, and the power and conservation/development sub-sectors saw gains of 3.6 percent each.

While the total month-to-month gain was somewhat mild, it's positive news for the housing industry--especially for homebuilders, a group that has already seen quite a bit of good news in the last month.

Housing starts and permits both grew (15 percent and 11.6 percent, respectively) in September, according to a ""report from the Census Bureau and HUD"":https://themreport.com/articles/september-housing-permits-starts-at-4-year-highs-2012-10-17, and sales of new single-family homes increased 5.7 percent. ""Builder confidence"":https://themreport.com/articles/stronger-traffic-boosts-builder-confidence-2012-10-16 also increased, rising to its highest level since June 2006, the ""National Association of Home Builders"":http://www.nahb.org/default.aspx reported.