A strong housing market continued to fuel construction spending this fall.
Construction spending grew an estimated 1.3 percent in October to $1.43 trillion, seasonally adjusted, compared to $1.42 trillion in September, according to the U.S. Census Bureau’s monthly report.
Private housing units made up the lion’s share of the total amount spent, with an adjusted estimate of more than $637 billion going toward residential construction, or 44 percent of the monthly total. Nonresidential construction accounted for nearly $457 billion, a 0.7 percent drop from September’s nearly $460 billion spend. Public construction totalled close to $345 billion.
The amount of money pouring into construction, unadjusted, is up 4.3 percent year-to-date with $1.18 trillion confirmed so far this year. That’s an increase of $49 billion from the first 10 months of 2019.
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Construction spending up from a year ago
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Homebuilder confidence soars to another record high
As strong demand from homebuyers continues to drive housing prices to new highs, builder confidence has followed suit.
Housing starts rose 5 percent in October with 1.5 million housing units beginning construction. But supply can’t keep up with demand: Last month, the number of existing homes on the market fell to an all-time low with just 1.42 million units on the market at the end of October.
Lawrence Yun, chief economist of the National Association of Realtors, has called for additional measures aside from construction to cure the lack of available housing stock.
There are also signs that the housing market’s strong performance could be waning. Pending home sales declined for two months running in October and September, which could signal a drop in closed sales in one or two.
The slowdown could be a product of the market’s uneven recovery, described as a K-shape, where higher earners recover faster than those making less or who’ve experienced income loss due to the pandemic.
Prospective buyers who haven’t owned a home before or who have poor credit are increasingly having trouble securing a home mortgage, as are buyers interested in homes located in densely populated areas, particularly in New York City and San Francisco.