The U.S. Census Bureau announced that construction spending during December 2018 was estimated at a seasonally adjusted annual rate of $1.29 trillion, retreating 0.6% from the revised November estimate of $1.3 trillion.
Notably, December’s spending is 1.6% above the December 2017 estimate of $1.27 trillion.
Spending on private construction was at a seasonally adjusted annual rate of $991.2 billion, 0.6% below the revised November estimate of $997.1 billion.
Of that, residential construction spending was at a seasonally adjusted annual rate of $536.7 billion in December, which is 1.4% below the revised November estimate of $544.2 billion.
Interestingly, December’s Housing Market Index revealed affordability concerns contributed to weakened faith in homebuilder confidence, according to the National Association of Home Builders and Wells Fargo.
In fact, December's reading was the lowest HMI score since May 2015, marking a three-year low.
“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” NAHB Chairman Randy Noel said.
Despite this, Noel notes that recent declines in mortgage interest rates should help move the market forward.
“Ongoing reduction in mortgage rates in recent weeks coupled with continued strength in the job market are helping to fuel builder sentiment,” Noel said. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season.”