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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.


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.


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.


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