Total construction spending declined by 0.7 percent in August as spending on new houses turned sharply lower, while public and private nonresidential construction posted mixed results, according to an analysis the Associated General Contractors of America released today of federal spending data. Association officials said that rising interest rates were hurting demand for housing and many private-sector projects while the impacts of new federal funding for infrastructure, semiconductor plants and green energy facilities have yet to fully kick in.
“The construction market is in a transition that is likely to accelerate in the months ahead,” said Ken Simonson, the association’s chief economist. “Steeply rising interest rates have crushed demand for single-family housing and threaten developer-financed projects, while newly enacted federal legislation will soon boost investment in power, manufacturing, and infrastructure construction. But a pickup in these segments will require improvements in the timely approval of projects and adequate supplies of workers and materials.”
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