U.S. construction spending drops in over a year

Washington, Oct 3 (Prensa Latina) Construction spending in the United States dropped 0.7% in August, largest decrease in a year and a half, the Department of Commerce (DOC) said Monday.

October 3, 2022
17:33

The DOC detailed this decline, largest ever since February 2021, is affected by the decreased single-family home building investment amid mortgage rate hikes.

DOC´s report also said that private project investments brought down 0.6% after declining 1.2% in July, while residential building investment scaled down 0.9% and spending on single-family projects plummeted to 2.9%.

Specialists stressed the aggressive tightening of the U.S. Federal Reserve’s (FED) monetary policy and its interest rate hikes is weighing on the housing market, so construction and home sales weakened the indexes in recent months.

The FED raised in the last period its official interest rate from near zero to 3.00%-3.25%.

Meanwhile, the U.S. mortgage finance agency Freddie Mac indicated that interest rates on 30-year fixed mortgages averaged 6.70% last week, the highest ever since July 2007. DOC´s report also noted that investment in private nonresidential structures such as oil and gas well drilling increased 0.1% in August, and spending on nonresidential structures declined for five consecutive quarters.

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