U.S. construction spending increased less than expected in December as prices of construction inputs soared.
The Commerce Department said on Tuesday that construction spending rose 0.2 percent after advancing an upwardly revised 0.6 percent in November. The earlier report for November showed just a 0.4 percent gain.
Economists polled by Reuters had forecast construction spending gaining 0.6 percent. Construction spending increased 9.0 percent on a year-on-year basis in December. It rose 8.2 percent for the entire year.
When adjusted for inflation, the figures indicate that the construction sector’s real output is contracting. Prices of goods used in construction in December rose 0.6 percent, according to the Department of Labor’s Producer Price Index, more than three times the rate of spending. Compared with a year ago, construction goods prices were up 22.3 percent. The cost of services purchased for construction rose 0.4 percent in December and were up 9.6 percent compared with a year ago.
Private sector construction spending rose 0.7 percent in December and is up 12.7 percent compared with December of 2020. Public-sector construction fell 1.6 percent and was down 2.9 percent compared with the prior December.
The value of private construction in 2021 was $1,242.8 billion, a 12.2 percent above the 2020 spending level. Residential construction rose to $774.9 billion, 23.2 percent jump. Nonresidential construction for the full year came in at $467.9 billion, a 2.3 percent drop from 2020.
The value of public construction in 2021 was $346.2 billion, 4.2 percent below the 2020 spending level. Educational construction dropped 7.6 percent and highway construction rose 0.2 percent. Spending on public safety projects declined by almost one-third compared with 2020.
Single-family homebuilding spending soared 2.1 percent compared with November, outpacing the 1.3 percent rise in the prices of goods and the 0.9 percent rise in the price of services. Compared with December of 2020, new single-family home construction spending rose 16.3 percent, exceeding the 9.8 percent rise in services but falling short of the 19.7 percent increase in the rise of goods. For the full year, single-family construction was 32.8 percent higher than the prior year.
The Biden administration in November doubled the duties on imported lumber from Canada to an average of 17.9 percent from 8.99 percent, accusing the Canadians of violating anti-dumping rules.
The National Association of Home Builders said the duties were driving up the costs of housing in the U.S., in contradiction to the Biden administration’s repeated promises to make home-ownership more affordable.
“With the nation in the midst of a housing affordability crisis, the Biden administration has moved to slap a huge, unwanted tax hike on American home buyers and renters,” said NAHB Chairman Chuck Fowke. “This is the worst time to add needless housing costs onto the backs of hardworking American families.”
Nationally, home prices were up 18.5 percent in December compared with the month a year earlier. On average prices were 15 percent higher last year than this year, according to CoreLogic. The national inventory of active listings fell 26.8 percent over last year, creating a massive shortage of homes despite high demand.
COMMENTS
Please let us know if you're having issues with commenting.