US construction spending rose 0.3 percent in December

Construction spending in the United States increased in December, matching economist expectations following a rebound in single-family homebuilding and sustained activity in home renovations. Data released by the Commerce Department's Census Bureau on Friday indicated a 0.3% rise in spending, a recovery from the 0.2% decline observed in November. On a year-over-year basis, construction spending was down 0.4%, with the data release having been delayed by a previous government shutdown. Investment in private construction projects grew by 0.5% in December, supported by a 1.5% jump in residential construction. This segment was bolstered by a 1.5% increase in new single-family housing projects and a 0.1% rise in multi-family units. Despite these gains, the homebuilding sector continues to struggle with high mortgage rates, expensive materials linked to import tariffs, and a shortage of skilled labor. While residential investment has declined for four consecutive quarters, a recent softening in mortgage rates may provide future relief, though the lack of available building lots remains a significant constraint. In the nonresidential sector, spending on private structures like offices and factories fell by 0.7%, marking the eighth consecutive quarter of contraction despite growth in artificial intelligence data center construction. Public construction spending also trended lower, falling 0.5% as a 0.7% decrease in state and local outlays offset a 1.6% increase in federal government projects.