With a lower inventory of existing homes for sale and high affordability provided by mortgage rates many prospective buyers are opting to purchase a newly constructed home. However, a new report from the Commerce Department shows spending on construction projects was down in November, after a month of increases seen in October.
Data from the department shows spending fell 0.3 percent bring the annual rate to just over $866 billion. This is down from expectations from multiple economists, including those surveyed by Bloomberg who predicted a 0.6 percent increase and Dow Jones' forecast for a 0.7 percent gain. In October, spending was up by 0.7 percent.
When looking at residential activity, homebuilding outlays were up 0.4 percent in November, pushing the annual rate to $295.3 billion, the largest rate seen in the government's real estate records since November 2008. The report notes private construction slipped 0.2 percent from figure seen in the month before.
Stabilizing economic factors should lead to a stronger housing market, as already reflected in home prices and sales which were up throughout much of 2012. While 2013 could be relatively flatter in sales and price gains, construction is predicted to increase thanks to a lower inventory of existing homes.