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Construction Spending Up 1.1% in October

blueprintsConstruction spending saw a substantial increase in October, advancing on solid gains in homebuilding outlays.

In a report on Tuesday, the Commerce Department estimated construction spending throughout the month at a seasonally adjusted annual rate of $971 billion, an increase of 1.1 percent over September's revised estimate of $960.3 billion.

Compared to a year ago, October's rate of spending was up 3.3 percent.

A large share of October's increase came in spending on residential projects, which was up 1.3 percent from September to an adjusted yearly rate of $359.1 billion. In the private sector, spending on home construction climbed 1.3 percent, rising for both single-family (1.3 percent) and multifamily (1.8 percent) projects to come to a total rate of $353.8 billion.

Despite the promising gain, economists Patrick Newport and Stephanie Karol at IHS Global Insight called October's residential construction numbers "deceptively strong."

"The figure for single-family construction depends on that month's average single-family home price," the pair said in a note to clients. "That number launched itself into outer space in October ... While this will make fourth-quarter construction spending figures shine, we believe this is an anomaly caused by sampling issues, rather than true, sustainable strength."

Meanwhile, spending on public residential construction dropped 2.2 percent month-over-month, declining to an annual adjusted rate of $5.3 billion. That dip was offset by gains across nearly all categories of nonresidential construction, led by double-digit increases in commercial and public safety projects.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
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