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Spending on U.S. construction projects rebounded in February, helped by a surge in home construction which rose to the highest level in more than four years.
Construction spending rose 1.2 percent overall in February compared to January, when construction had dropped 2.1 percent, the Commerce Department reported Monday. Spending rose to a seasonally adjusted annual rate of $885.1 billion, which was 7.9 percent higher than a year ago.
The advance was led by a 2.2 percent rise in private residential construction, which climbed to an annual rate of $303.4 billion, the best showing since November 2008. Private nonresidential construction was up 0.4 percent while public construction rose 0.9 percent.
“I am really starting to like these national construction reports, particularly since they reflect what we’re seeing in the Albuquerque metropolitan area as well,” said Jim Folkman, executive vice president of the local homebuilding group, HAB.
“There is a significant pent-up demand for housing, and that factor, along with interest rates near record lows, have combined to put upward pressure on housing starts and therefore construction spending,” he told the Journal. “We’re projecting about a 20 percent increase in starts this year over last, and this report confirms we’re still on pace to do just that.
“We’re beginning to also experience a skilled-labor shortage, so it’s never easy for our builders, but we’ll gladly take this turnaround,” Folkman said.
Construction spending is still well below healthy levels. But it is slowly coming back, led by a recovery in housing that looks to be strengthening this year.
Roxanne Rivera-Wiest, president of the Associated Builders and Contractors of N.M., said, “We are cautiously optimistic about the rise in commercial construction spending in this report. Since we are approaching what are typically the busiest months for the construction industry, it is our hope that the trend continues.”
