Construction Spending Fell in June

The Census Bureau announced today that the value of construction put in place fell 0.3% in June. This is the first decline in total construction spending since January.

Private sector construction activity fell 0.4 percent for the month led by a 0.6 percent drop in residential construction spending. This is the first decline in residential building in 16 months but is the largest decline in two and a half years. Given low interest rates, strong home sales, and still elevated housing permits, June's outsized decline in residential construction represents little more than an aberration. Home building was a contributor to GDP growth last quarter and shows every sign of remaining robust over the near term, though to be sure, rising rates should cool off the market significantly over the medium term.

Private nonresidential construction was unchanged in June, follow a 1 percent drop in May. However, because of an outsized jump in nonresidential building in April, Q2 spending was still up at a sizable 11.8 percent annualize rate in nominal terms.

Public sector construction rose 0.2 percent for the month.