Spending on Construction Falls in March
Construction spending fell in March for the first time this year, the government said today, down 1.4% as the weather returned to normal and mortgage interest rates continued to rise.
The Commerce Department said residential, non-residential and government construction spending totaled a seasonally adjusted annual rate of $432.5 billion after jumps of 3.2% in February and 2.4% in January.
The decline was the largest since a 1.5% fall in February, 1989.
Despite the drop, spending was 3.8% above that of March, 1989, when it totaled $416.8 billion.
David Berson, chief economist for the Federal National Mortgage Assn., had said after the February report that construction spending would begin to lose its seasonal benefit in March.
“We expect it to start leveling off, if not decline, because it will no longer have the seasonal boost and also because of increasing interest rates,” he said.
After the fourth coldest December on record, January broke the record as the warmest. February was also unseasonably warm, and temperatures during both months induced builders to get construction under way early.
Mortgage rates, which started the year in the single digits, ranged between 10.22% and 10.34% during March, when temperatures also returned to normal.
Residential building continued to rise in March, up 1.8% to an annual rate of $203.2 billion on top of gains of 1.5% in February and 3.8% in January.
Single-family building edged up 0.2% to $122.5 billion after a 3.6% advance in February and a 2.3% gain a month earlier. Apartment construction was unchanged at $20.7 billion after falling 2.4% in February and 1.0% the previous month.