A surge early in the year was not enough momentum to push construction spending higher in the second quarter. New figures for May released by the U.S. Census Bureau shows a 0.8 percent decline in construction spending from April. On a year-over-year basis, overall spending is off by 2.3 percent, largely due to it being dragged down by an 11.2 percent drop in residential construction.
Although new polling shows that homebuilders are optimistic about the future of the housing market, spikes in material costs and a labor scarcity is putting the brakes on increases in construction projects.
Homebuilders also appear to be focusing more on multi-unit dwellings like apartment buildings. As construction spending shrank in most other areas, multi-family spending rose 9.3 percent.
Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.375 percent.
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