WASHINGTON, Nov 17 (Reuters) – U.S. construction spending unexpectedly rebounded in August, likely lifted by home renovations as higher mortgage rates continued to weigh on single-family homebuilding.<\/p>\n
The Commerce Department’s Census Bureau said on Monday that construction spending increased 0.2% after an upwardly revised 0.2% gain in July. Economists polled by Reuters had forecast construction spending would ease 0.1% after a previously reported 0.1% dip in July.<\/p>\n
Sign up here.<\/a><\/p>\n Spending decreased 1.6% on a year-over-year basis in August. The report, initially due on October 1, was delayed by a record 43-day shutdown of the federal government. It was the first of the delayed reports to be published, with September’s monthly employment report<\/a> now scheduled for release on Thursday.<\/p>\n Spending on private construction projects rose 0.3% in August. Investment on residential construction increased 0.8%. But outlays on new single-family housing projects dropped 0.4%. Spending on multi-family housing units, which account for a small share of the housing market, rose 0.2%.<\/p>\n The investment decline in single-family construction suggests renovations were probably the driver of the rise in residential construction.<\/p>\n Mortgage rates have declined from their lofty levels in August as the Federal Reserve resumed its interest rate cuts<\/a>, data from mortgage finance agency Freddie Mac showed, which could boost construction activity in September.But mortgage rates have since halted their decline as U.S. central bank officials<\/a> signaled a reluctance to lower rates again next month. A tepid labor market is also sidelining potential homebuyers, and new housing inventory was elevated in August, which could discourage builders from undertaking new projects.<\/p>\n Investment in private nonresidential structures like offices and factories fell 0.3% in August. Spending on public construction projects was unchanged. State and local government construction spending was also unchanged, while outlays on federal government projects declined 0.8%.<\/p>\n Reporting by Lucia Mutikani; Editing by Paul Simao<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n