WASHINGTON (AP) - U.S. construction spending rose in
November at the strongest pace in more than four years, driven by solid gains
in home construction and commercial projects.
The Commerce Department said construction spending increased
1 percent in November to a seasonally adjusted annual rate of $934.4 billion.
That's the fastest rate since March 2009 and a slight improvement on the
revised 0.9 percent gain in October.
Residential construction rose 1.9 percent in November, after
falling in October. Homebuilding last exceeded the November pace shortly before
the 2008 financial crisis. Spending on single-family homes has increased 18.4
percent year over year, while spending on apartment buildings is up 36.3
percent during the same period.
Those gains are a positive sign for the overall economy.
More than two-thirds of the residential construction market comes from
single-family homes.
Each new home creates an average of three jobs for a year
and generates about $90,000 in tax revenue, according to National Association
of Home Builders. The new construction suggests that builders expect buying to
continue picking up in 2014.
The construction gains might restart some of the momentum
for home sales that has stalled in recent months. Increasing mortgage rates and
home prices have hurt affordability. Mortgage rates are nearly a full
percentage point higher than in the spring, even though they are close to
historic lows.
Rates rose in May when the Federal Reserve first signaled
that it might slow its $85 billion in monthly bond purchases, a move Fed
officials made after made after a December meeting.
The higher rates have also helped to encourage apartment
construction.
As homes become less affordable, more people choose to rent,
increasing the demand for apartments and causing builders to begin new
residential projects.
Commercial projects also increased 2.7 percent in November.
Spending on offices, communication projects and transportation projects
contributed to the increase.
Government construction spending fell 1.8 percent after
strong gains in October. Declines in expenditures on roadways, health care
facilities and sewer systems led much of the decrease.
Source: Philly.com
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