Flight From the Cities: Single Family Home Construction Spending Soared September

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Spending on home construction soared again in September, with single-family home projects jumping 5.7 percent.

Overall U.S. construction spending rose 0.3 percent in September, the fourth straight monthly gain after a coronavirus-caused spring swoon. The gain smaller was smaller than analysts had expected, pushed down by a steep decline in government construction projects.

Compared with a year ago, single-family home construction spending is up 8.2 percent.

By contrast, spending on office construction rose just 0.3 percent and is down 6.8 percent compared with a year ago. Spending on hotel construction fell 1.5 percent and is down 15 percent compared with last year.

Demand for single-family homes remains healthy as buyers rush to the market pushed by a desire for more space to work and school remotely, rising violence in cities amid calls to defund police, historically low interest rates under 3 percent, and the closing of amenities such as bars, restaurants, museums, and theaters. Rioting and looting this summer has left the business districts of some of the biggest cities badly damaged, with many looted stores still boarded up months later.

A lack of existing homes for sale has builders rushing to fill the void with newly-constructed houses.

Total residential construction was up 2.7 percent, with total private construction up 0.9 percent.

Spending on government construction projects fell 1.7 percent, with declines everywhere except health care facilities, schools and waste disposal sites. Government spending on projects related to public safety and streets and highways both shrunk by more than 5 percent. Spending on public projects has fallen as the state and local governments collect less tax revenue from individuals and businesses because of the economic effects of coronavirus and related closures.

Government spending on schools rose two percent.

Spending on non-residential private construction fell by 1.5 percent, with churches and offices the only categories to see growth.

During the first nine months of 2020, construction spending is up 4.1 percent over the same period last year.

The Commerce Department reported Monday that the September gain follows a downward revised gain of 0.8 percent in August.

–The Associated Press contributed to this report.


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