Spending on construction projects has continued to climb in the US as the COVID-driven housing boom continues into 2021.
A report from the US Commerce Department released Monday showed strong demand and ultra-low mortgage rates pushed US construction spending up by 0.9% to an annual rate of $1.459 trillion in November. The increase followed a 1.6% gain in October, up to a revised rate of $1.447 trillion.
Economists polled by Reuters forecast construction spending to climb by 1% compared to the 1.3% rise reported for October.
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“Strong residential activity has driven construction past pre-pandemic levels, but non-residential outlays remain nearly 6% below their early 2020 pace,” Nancy Vanden Houten, lead US economist at Oxford Economics, told RTTNews. “We expect this divergence in construction spending to narrow a bit as we move through 2020 as some recovery in non-residential outlays is expected to take hold, particularly in private spending.”
Spending on residential construction jumped 2.7% to a rate of $658.1 billion, with single-family construction up by 5.1%. This was more than enough to offset the 0.8% decline in spending on non-residential construction projects like gas and oil well drilling, which were down to a rate of $453.8 billion, according to the report.
Spending on public construction spending also dropped in November, edging down by 0.2%.
“Public outlays will likely continue to be constrained by tight state and local budgets despite a better than expected performance for revenues during the pandemic,” said Vanden Houten.