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US construction spending rose 0.9% in November, driven by the power of homebuilding

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By MARTIN CRUTSINGER

Washington (AP) — Spending on US construction projects increased 0.9% in November as housing construction strength offset weaknesses elsewhere in the construction industry.

According to the Department of Commerce, the November increase followed a significant 1.6% increase in October, with construction costs increasing 4.4% in the first 11 months of 2020 compared to the same period in 2019.

According to new data released on Monday, spending on homebuilding in November surged 2.7% and single-family homes surged 5.1%, while apartment construction was flat. Record low mortgage rates have spurred strong demand for housing, even as the global pandemic has resulted in widespread lockdowns in other parts of the economy.

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Housing activity, supported by a shortage of available housing, increased 16.1% from a year ago, while spending on private non-housing projects was 26.5 from the level a year ago for hotel and motel construction It has decreased by%, 9.5% below the level of a year ago. In November 2019, office construction fell 6.6%.

Many analysts say that many American telecommuting extensions brought about by the coronavirus will allow companies to choose to allow employees to work more away from the office. We believe it means that the demand for office space will decline in the next few years.

Spending on non-residential projects fell 0.8% in November, and spending on office buildings plummeted 8.1%. Spending on government projects in November fell 0.2%. Many state and local governments face severe budget constraints as tax revenues decline due to the sharp recession.

Rubyla Faruki, Chief US Economist in High Frequency Economics, said: “Overall, the trend for homes, especially single-family homes, is strong, and inventories of new and existing homes are tight.

She said housing construction should remain strong, but non-housing and government construction activities could remain constrained “due to turmoil from virus containment and sluggish demand associated with budget constraints.” Said high.

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Source: Associated Press

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