To the surprise of many observers, construction spending jumped in October across the nation. The federal government announced this week that construction spending was up 1 percent in October from the previous month to a seasonally adjusted annual rate of more than $1.1 trillion. It hasn’t been at that level since December of 2007.
From the Associated Press:
The construction of single-family homes and apartments climbed 1 percent in October, also reaching their highest level since December 2007. Manufacturers boosted their construction spending by 3 percent. And federal government building soared 19.2 percent, the biggest increase since October 2006.
Americans are staying in rental apartments for longer, rather than buying a home. That spurred a nearly 28 percent jump in apartment and condo construction in October from a year earlier. Nearly a third of buildings completed so far this year were apartments and condos, compared to just 27 percent before the recession began in late 2007.
At the same time, low mortgage rates and three years of solid job gains have boosted home sales, including purchases of new homes, which have jumped more than 15 percent year-to-date compared with last year.
Construction of schools, highways, and other infrastructure was up 1.4 percent in October, putting that kind of spending at its highest level in 5 years. It’s been up 6.6 percent over the last calendar year.
The jump in construction spending surprised some experts, according to Reuters:
Economists polled by Reuters had forecast construction spending rising only 0.5 percent in October. Construction outlays were up 13 percent compared to October of last year.
Construction spending in October was buoyed by a 0.8 percent rise in private spending, which touched its highest level since January 2008. Outlays on private residential construction gained 1.0 percent and hit their highest level since December 2007, reflecting increases in home building and renovations.