WASHINGTON(Reuters) – U.S. construction spending unexpectedly fell in December as investment in single-family homebuilding continued to slump amid higher mortgage rates.
The Commerce Department said on Wednesday that construction spending dropped 0.4% in December. Economists polled by Reuters had forecast construction spending unchanged.
Construction spending increased 7.7% on a year-on-year basis in November. It jumped 10.2% in 2022.
Spending on private construction projects decreased 0.4%. Investment in residential construction slipped 0.3%, with spending on single-family housing projects tumbling 2.3%. Outlays on multi-family housing projects increased 3.2%, boosted by strong demand for rental housing.
The Federal Reserve’s fastest interest rate-hiking cycle since the 1980s has driven housing into recession. Residential investment suffered its seventh straight quarterly decline in the fourth quarter, the longest such streak since the collapse of the housing bubble triggered the 2007-2009 Great Recession,
Outlays on private non-residential structures like gas and oil well drilling fell 0.5% in December.
Spending on public construction projects dropped 0.4%. Investment in state and local government construction projects fell 0.1%, while federal government construction spending declined 4.1%.
(Reporting by Lucia Mutikani)
