The U.S. Census Bureau of the Department of Commerce announced that construction spending during August 2018 was estimated at a seasonally adjusted annual rate of $1.319 trillion, only 0.1% above the revised July estimate of $1.317 trillion.

Notably, the August figure is 6.5% above the August 2017 estimate of $1.24 trillion.

Spending on private construction was at a seasonally adjusted annual rate of $1.0017 trillion, 0.5% below the revised July estimate of $1.0069 trillion.

Of that, residential construction was at a seasonally adjusted annual rate of $548.9 billion in August 0.7% below the revised July estimate of $553 billion.

Notably, August’s National Association of Home Builders/Wells Fargo Housing Market Index report revealed builder confidence in the market for newly-built single-family homes declined from 68 to 67 points.

NAHB Chairman Randy Noel said construction material costs continues to be a major deterrence to growth.

“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” Noel stated. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”

Despite these challenges, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development indicated housing starts increased 9.2% in August, according to the latest report.

First American Chief Economist Mark Fleming said the increase is well received.

“The growth in housing starts is welcomed news after two consecutive monthly declines,” Fleming stated. “Furthermore, the number of homes under construction has also increased by 4.6 percent compared to a year ago, indicating a new supply of homes in the future.”

But Zillow Senior Economist Aaron Terrazas said residential construction permits are the most reliable indicator of the new housing supply pipeline – and right now, that pipeline feels broken.