Spending on U.S. construction during July was estimated at a seasonally adjusted annual rate of $1.30 trillion, rising 0.1% from the revised June estimate of $1.29 trillion, U.S. Census Bureau said. July’s spending was 2.7% below a year earlier.
Spending on private construction was at a seasonally adjusted annual rate of $963.1 billion, 0.1% below the revised June estimate of $963.7 billion, and 4.8% below a year ago.
Of that, residential construction spending was at a seasonally adjusted annual rate of $506.7 billion in July, which is 0.6% above the revised June estimate of $503.5 billion but 6.6% down from a year ago.
A measure of homebuilder confidence in August revealed that although the construction industry's outlook is improving, many builders still see affordability concerns as a major hurdle for production. National Association of Home Builders/Wells Fargo Housing Market Index measuring current sales conditions inched forward to 73 points from 71 points, while buyer traffic rose to 50 from 48. However, expectations over the next six months fell to 70 from 71.
NAHB Chief Economist Robert Dietz said even as builders try to rein in costs, home prices continue to outpace incomes.
"The current low mortgage interest rate environment should be getting more buyers off the sidelines, but they remain hesitant due to affordability concerns,” Dietz said. “Still, attractive rates should help spur new home purchases in large metro suburban markets, where approximately one-third of new construction takes place."
“Builders report solid demand for single-family homes,” NAHB Chairman Greg Ugalde said. “However, they continue to grapple with labor shortages, a dearth of buildable lots and rising construction costs that are making it increasingly challenging to build homes at affordable price points relative to buyer incomes."