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US construction spending dips in July

The U.S. housing market was still constrained by high mortgage rates in July, which lowered the construction spending.

Census Bureau of the Commerce Department reported on Tuesday that construction expenditures dropped 0.1%, following a 0.4% decline in June. The drop was expected by economists. In July, spending fell 2.8% compared to the same month last year.

Spending on private construction fell by 0.2%. Residential construction investment increased by 0.1%. Outlays for new single-family housing projects also rose 0.1%.

The second quarter saw the fastest contraction in residential investment in over two and a half years. The third quarter is expected to see a further decline, marking the third consecutive quarterly decline.

High mortgage rates have harmed the housing market. Mortgage rates are still high, despite the fact that they have dropped from their lofty levels this year on expectation of a Federal Reserve rate cut in September. Slowing employment is also affecting home sales.

In July, the inventory of new homes completed and for sale reached its highest level in 16 years. In July, spending on multifamily housing units decreased by 0.4%. Investments in non-residential private structures such as offices and factories fell by 0.5%. The second consecutive quarter saw a decline in nonresidential structure spending.

The increase in public construction spending was 0.3%. The state and local governments increased their construction expenditures by 0.1%, while federal government spending increased by 3.2%. Lucia Mutikani, reporting; Andrea Ricci, editing.

(source: Reuters)