Northwest Arkansas Democrat-Gazette
February cold chills construction spending
WASHINGTON — U.S. construction spending fell in February after several months of steady gains, likely because of unseasonably cold weather and winter storms in the South.
The Commerce Department said Thursday that spending on building projects slipped 0.8% in February, after a 1.2% gain in January. The drop was driven by lower spending on apartments, hotels, hospitals and educational facilities.
Public construction spending also dropped sharply, declining by 1.7%. State and local government budgets have come under strain during the pandemic, as tax revenue has fallen because of widespread unemployment and lower business revenue.
Homebuilding has been a bright spot for construction in the pandemic, as more people have sought larger living spaces to work from home and for children to attend school online. But residential construction shrank 0.2% last month, mostly because of bad weather. The drop was driven by a decline in apartment construction, while singlefamily building rose slightly.
New-home construction has been a big driver for developers since the pandemic. Construction spending on homes and apartments has soared more than 21% in the past year, driving all construction spending up 5.3% since the pandemic struck.
Mortgage buyer Freddie Mac reported Thursday that the benchmark 30-year loan rate was 3.18% this week, up from 3.17% last week. A year ago, the rate was 3.33%.
The 15-year loan, popular among mortgage refinancers, was unchanged from last week at 2.45%. A year ago it was 2.82%.
“Although mortgage rates remain low, we are beginning to see a pullback by those looking to enter the housing market,” said Sam Khater, Freddie Mac’s chief economist.
While mortgage rates remain historically low, strong demand for homes has led to low inventory and higher prices.
Wednesday, the National Association of Realtors’ index of pending home sales tumbled 10.6% to 110.3 in February, its lowest level since May of last year. Combined with a 2.4% dip in January, contract signings are now 0.5% behind where they were last year after eight straight months of year-overyear gains.
In January, U.S. home prices increased at the fastest pace in seven years, according to the S&P CoreLogic Case-Shiller 20-city home price index. The pandemic has fueled demand for single-family houses even as the supply for such homes shrinks.