US construction spending surges in August

WASHINGTON, Oct 1 (Reuters) - US ‌construction spending ​unexpectedly ​surged in August, boosted by outlays on nonresidential structures like offices and power plants, but the trend ‌remained weak as higher mortgage rates weighed on homebuilding.

The ⁠Commerce Department's Census Bureau said on Thursday that construction spending jumped 0.9% ‌after an upwardly revised 0.1% ‌dip in July. Economists polled by Reuters had forecast construction spending unchanged in August after a previously reported 0.5% ​decline in July.

Construction spending dropped 1.7% on a year-over-year basis in August. Spending on private construction projects shot up ⁠1.1% in August after falling 0.2% in July. Investment in private nonresidential structures increased ​1.0% in August. Spending on power plants rose 0.9% and outlays on office projects soared 4.6%.

Investment in ​residential projects surged 1.1% in August, ‌likely reflecting renovations. Outlays on single-family housing projects rose 0.2%, but dropped 3.5% on a year-over-year ⁠basis.

The average rate on a 30-year fixed-rate mortgage has soared more than 100 basis points since the US-Israeli war with Iran started ⁠in late February, weighing on demand and leaving an overhang of unsold ​new homes on the market.

It averaged 7.03% last week, the highest level since January 2025, data from mortgage finance firm Freddie Mac showed. Spending ‌on multi-family housing units, which account for a small share of the housing market, increased 0.2% ‌in August.

Investment in public construction projects rose 0.2% after edging ⁠up 0.1% in July. State ‌and local government construction ​spending advanced 0.3%, while outlays on federal government projects declined 0.7%.

(Reporting by Lucia Mutikani; Editing by Andrea ‌Ricci )

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