Recently, the US real estate market has seen a surge. An improving economy resulted in more jobs, and more people able to purchase homes. With this increase in demand came a decrease in supply, and construction struggled to catch up. However, according to the Associated Press, spending on construction increased 0.6% in September.
Private residential construction rose to the highest level since January 2008, in the midst of the Great Recession.
According to the AP, much of this spending surge was influenced by construction of apartment buildings. From August to September, construction of condominiums and apartment buildings went up 4.9%. Meanwhile, construction of single-family homes still rose, but only 1.3%. The Commerce Department said today that overall, spending on construction rose to a seasonally adjusted annual rate of $1.09 trillion.
Nonresidential construction only rose 0.1% in September. Construction of churches and religious buildings rose 5.6%. Public construction grew 0.7 percent from August. Spending on schools and other educational buildings rose 2.4 percent, and spending on water supply facilities was up 4.8 percent. Federal construction spending fell 1 percent, the biggest decline since a 4.4 percent drop in June.
Currently, the global economy is in limbo and weak overall, so the US real estate market’s resilience is particularly impressive. The economic weaknesses abroad have had some negative impact on American manufacturing and hiring. Last week, commerce reported that private investment in housing grew at an annual pace of 6.1 percent from July through September. This hike was four times the 1.5 percent growth registered by the overall economy.
On the surface, today’s data net out to be somewhat reassuring, if not perfect,” said Diane Swonk, chief economist at Mesirow Financial. “Friday’s employment report will be the primary focus of the Federal Reserve, where the threshold for liftoff is low.”
Low interest rates continue in the US, after the Fed decided last week not to raise them. They meet again in December and may hike up rates then.
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