Flight from the Cities: Construction Spending Surges Higher, Led by Single Family Homes

American flag waving in the wind on the top of a construction home framing. Blue sky and white clouds background.
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U.S. construction spending jumped 1.4 in August, led by surging building of single-family homes.

The Commerce Department said Thusday that spending on residential construction rose 3.7 percent. Spending on single-family homes accelerated by 5.5 percent. Spending on apartment construction dipped 0.1 percent, reinforcing evidence that the strength of the U.S. housing market is being fed by people moving into houses from apartments.

The prior month’s figure was revised up 700 percent from a 0.1 percent gain to 0.7 percent gain. That makes August’s doubling all the more impressive because it indicates acceleration from an already strong base.

Economists had forecast spending to be half of what the Commerce Department reported.

Compared with a year ago, construction spending was 2.5 percent higher. July’s figure was raised from a 0.1 percent annual decline to a 1.9 percent rise.

The revisions and better than expected gains will likely push up estimates for third-quarter economic growth.

The U.S. housing market has been on an explosive surge in the subsequent months as Americans sought more privacy and living space, increasingly work remotely, and fled from decaying cities beset by resurgent virus infections, lockdowns of cultural amenities such as museums and theaters, shuttered bars and restaurants, deteriorating finances, rioting, rising murder rates, and leftist politics.

A report on private payrolls on Wednesday said that construction firms had hired 60,000 additional workers.

Spending on nonresidential construction declined by 0.3 percent with hotels, office buildings, and shopping centers all suffering declines. Many of these remain shuttered or deeply underutilized as people work from home, avoid unnecessary travel, and shop online.

Total government construction ticked up 0.1 percent. Spending on highway projects up 1.9 percent.

–The Associated Press contributed to this report.

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