WASHINGTON (AP) -- The Commerce Department reports on spending on U.S. construction projects for August. The report will be released at 10 a.m. Tuesday. Before the government shutdown, the report was scheduled to come out Oct. 1.
ANOTHER INCREASE: Economists are predicting that construction spending increased 0.4 percent in August compared with July, according to a survey by FactSet.
SOLID REBOUND: In July, spending on construction projects rose 0.6 percent, led by strong gains in both housing and nonresidential projects.
Spending on residential construction increased to its highest level since 2008 but spending on government projects declined in July.
Total construction in July was 5.2 percent higher than it was a year ago with residential activity up 17.2 percent and nonresidential construction up a more modest 2 percent. Public construction is down 3.7 percent from a year ago as all levels of government are still facing tight budget constraints.
The housing rebound that began in 2012 has helped drive economic growth and create jobs in construction. But mortgage rates are nearly a full percentage point higher than the spring, an increase that began in May when the Federal Reserve first signaled that it might slow its $85 billion in monthly bond purchases.
However, at its Sept. 18 meeting, the central bank decided to keep its pace of bond purchases unchanged after lowering its outlook for economic growth. Mortgage rates have retreated a bit since that announcement. Economists are hoping that the housing recovery will keep moving forward given that even with the summer increase in rates, mortgages still remain near historic lows.
Sales of new homes rose in August by 7.9 percent, rebounding after a 14.1 percent drop in July. August also marked the best month for sales of previously occupied homes in more than six years, an annual level of 5.5 million homes. And homebuilders remain more confident in the market than they have been in eight years.
The housing market has been one of the strongest performers this year in an otherwise sluggish economy, helped by steady job gains, low mortgage rates and a limited supply of available homes for sale.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to National Association of Home Builders.
- Budget, Tax & Economy