Construction Spending Improves For Third Straight Month

Construction spending improved for a third straight month in September, up 0.5 percent and near the top end of Econoday's consensus range though year-on-year change, at minus 2.0 percent, remains in the negative column and offers a reminder of prior declines. But the news for September is positive led by a 1.3 percent monthly rise in single-family construction, a key area that helps boost residential investment in the GDP account and which will provide new supply and new choices for buyers in the new home market.

Public construction, reflecting heavy spending underway at the state and Federal levels, is another positive, up 1.5 percent in the month. Private construction, boosted by single-family homes, rose 0.2 percent to offset a 0.3 percent decline in private nonresidential construction. A 0.7 percent monthly drop for multi-family homes offset some of the single-family gain though the private residential side of the report still managed a 0.6 percent September gain.

The decline in nonresidential spending, where spending on commercial building has been very weak this year, will be a concern for the Federal Reserve which is closely watching the status of business investment. Otherwise, there's more positives than negatives in today's report especially single-family homes where increased building looks to keep emerging sales momentum alive for new homes.