WASHINGTON, Nov 2 (Reuters) – US construction spending tumbled in September, nearly reversing the prior month’s upwardly revised jump, likely because high materials costs depressed outlays on residential renovation projects.
The Commerce Department’s Census Bureau said on Monday that construction spending fell 1.9% after an upwardly revised 2.0% increase in August. Economists polled by Reuters had forecast construction spending would climb 0.3% after a previously reported 0.9% rise in August.
Construction spending dropped 2.7% on a year-over-year basis in September. Spending on private construction projects decreased 2.4% in September after gaining 2.6% in August.
Investment in residential projects slumped 5.5% in September, likely reflecting weakness in renovations. Outlays on single-family housing projects were unchanged but down 2.4% on a year-over-year basis.
Residential investment eased back into contraction in the third quarter, as the US-Israeli war with Iran pushed up mortgage rates. The average rate on a 30-year fixed-rate mortgage has soared by at least 125 basis points since the war started in late February, data from mortgage finance firm Freddie Mac showed.
Spending on multifamily housing units, which account for a small share of the housing market, edged up 0.1% in September.
Investment in private nonresidential structures increased 1.1% in September, with outlays on power plants advancing 1.2%.
Public construction investment dipped 0.1% after gaining 0.2% in August. State and local government construction spending fell 0.3%, but outlays on federal government projects jumped 2.5%.
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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