U.S. construction spending was weaker than expected in November, weighed down by higher-than-anticipated borrowing costs.
The Commerce Department’s Census Bureau said on Thursday that construction spending was unchanged in November after an upwardly revised 0.5 percent gain in October. Economists had forecast a 0.3 percent increase.
Spending on private construction ticked up 0.1 percent compared with the previous month, with residential construction climbing 0.1 percent and nonresidential construction outlays falling 0.1 percent. Public sector construction spending also declined 0.1 percent.
In the first 11 months of the year, total construction spending rose 6.5 percent above the first 11 months of 2023. Residential spending rose 5.8 percent and nonresidential spending rose seven percent.
Mortgage rates rose sharply in October and November. The national average for a new 30-year fixed-rate mortgage was around six percent in late September. By late November, the average rate had climbed to 6.84 percent.
The rate increases came despite the Federal Reserve lowering the target rate for its overnight benchmark in September and November, the first rate cuts since the onset of inflation sent rates soaring starting in 2022. The Fed lowered its target again in December.
The spending figures are seasonally adjusted but are not adjusted for inflation. Prices for inputs into construction projects rose 4.5 percent in November compared with a year earlier.