Construction Spending Rises Slowly in May

Spending on the construction of new single-family homes edged up 0.4% in May as housing starts slowed in May and April, according to a new government report.

The Census Bureau reported Monday that spending on new single-family construction rose to a $166.3 billion seasonally adjusted annual rate in May from a $165.7 billion rate in April.

“Drops in single-family housing starts in March and April account for the recent slowdown in single-family spending,” said Global Insight economist Patrick Newport. “The slowdown is temporary—demand for single-family new homes is picking up, and is likely to accelerate soon,” he added.

Overall, single-family construction spending is up 33% from May 2012 and multifamily spending is up 52%, which is contributing to real economic growth. Spending on residential construction might contribute close to half a percentage point to gross domestic product in the second quarter.

Meanwhile, construction spending looks more robust on a nonadjusted basis.

Investment in new single-family construction rose to $14.2 billion in May, up from $13.3 billion in April.

During the first five months of this year, spending totaled $61.2 billion, up from $45.4 billion during the same period in 2012.