- Total construction spending in September 2023 was 0.4% higher than in August and 8.7% higher than a year earlier.
- The housing shortage is boosting new construction, but high interest rates may hamper further gains.
- Public construction is also up, with highway construction down slightly.
Total construction spending in September was $1.997 trillion, 0.4% higher than the revised estimate in August, according to the U.S. Census Bureau.
The September increase was in line with economists’ expectations and marked the ninth consecutive increase, as government incentives grow public construction and home builders work to fill demand in the housing sector. Compared with the same month in 2022, construction spending rose 8.7% in September.
Residential construction spending in September was $872 billion, 0.6% above August’s revised estimate. With previously owned homes scarce, new construction is on the rise in an effort to fill demand. But the average rate on the popular 30-year fixed mortgage is hovering near 8%, sidelining many would-be homebuyers and potentially putting a hamper on homebuilders’ construction growth.
“September’s strength can be largely attributed to an upshift in single-family building as builders continue to find success employing price discounts and rate incentives to sell new homes,” wrote Wells Fargo Economists Jackie Benson and Patrick Barley in an analysis of the report.
Spending on nonresidential construction rose 0.1% in September compared with the revised August estimate, totaling $683.9 billion.
Public construction spending in September was $440.6 billion, 0.4% higher than the revised August estimate.
“Public construction is also mounting an impressive run, as funds from the CHIPS and Infrastructure Investment and Jobs Act are getting dished out,” wrote Moody’s Analytics’ Justin Begley in an analysis.