Remodeling rout drags construction spending lower in September
Census Bureau data shows surging borrowing costs coincided with a steep pullback in residential investment
By Ryan Kingsley
Construction, Market Trends, Real Estate
Private investment in single-family residential construction contracted in September as Treasury yields surged and the Federal Reserve raised its benchmark interest rate for the first time in three years, according to the latest government estimates.
Prospective homebuyers have been dealing with the impacts of Trump administration tariffs and the Iran war, now in its ninth month. They watched borrowing costs broadly increase across the U.S. economy, driving mortgage demand, home sales, and builder sentiment lower in September.
The seasonally adjusted annual rate of new private single-family spending was approximately $403.4 billion, flat from August but about 2.4% lower than the $413.2 billion recorded a year ago, according to U.S. Census Bureau estimates published Monday.
New single-family investments are down 4.8% year to date. Meanwhile, industry forecasts of average 30-year mortgage rates between 7% and 7.5% through the end of next year portend another challenging year for homebuying affordability and home building activity.
Overall private residential spending, which includes single-family and multifamily investments, retreated nearly 9% from a year ago to a seasonally adjusted annual rate of $848.8 billion. That reflected a 5.5% drop from...