U.S. construction spending rose by more than twice the level expected in January, highlighting the ongoing strength of the U.S. housing market.
Construction spending jumped 1.7 percent from December’s revised level to a seasonally adjusted annual rate of $1.52 trillion, the Commerce Department reported Monday. That was better than the eight-tenths of a percent forecast by economists.
The January figure is 5.8 percent higher than a year prior.
Residential construction was been driven much higher by a sharp increase in demand for single-family homes and a shrinking supply of existing homes for sale. This rose 2.5 percent from December to a seasonally adjusted annual rate of $713.0 billion in January. Compared with a year ago, residential construction spending is up an astounding 21.1.
Private sector construction spending on single-family homes hit $376.2 billion, up 3 percent for the month and up 24.2 from a year ago.
Nonresidential construction has been weak since the pandemic struck. It rose 0.9 percent in January but is still down 5 percent compared with a year ago. Absent government construction spending, nonresidential construction is down 1o.1 percent from last year.
The hard hit categories include hotel construction, down 22.7 percent from a year ago, and recreation and amusement construction, down 22.1 percent. Both grew in January, with lodging construction rising 0.7 percent and amusement construction rising 1.6 percent.
Government spending on construction is up 2.9 percent from a year ago and rose 1.6 percent from a month earlier. Spending on highways and streets rose 5.8 percent in January to $107.8 billion. Compared with a year ago, this is up 6.5 percent.