US construction spending unexpectedly falls in June

WASHINGTON, Aug 3 (Reuters) - U.S. ‌construction spending ​unexpectedly fell ​in June as higher mortgage rates continued to weigh on homebuilding.

The Commerce Department's Census Bureau said on Monday ‌that construction spending dipped 0.1%. Construction spending in May ⁠was revised to show it was unchanged instead of edging up 0.1%, as previously ‌reported. Economists polled by ‌Reuters had forecast construction spending would climb 0.2%.

Construction spending dropped 3.2% on a year-over-year basis in June.

Spending on private construction projects ​eased 0.1% after falling 0.2% in the prior month. Investment in residential construction dropped 0.3%. Spending on new single-family housing projects ⁠fell 0.6%. It decreased 3.3% on a year-over-year basis in June.

The average rate on the ​popular 30-year fixed-rate mortgage has increased by nearly 70 basis points since the U.S. and Israel attacked Iran ​at the end of February. The ‌rate averaged a one-year high of 6.66% last week, data from mortgage finance agency Freddie Mac showed.

Spending ⁠on multi-family housing units, which account for a small share of the housing market, declined 0.7% in June. Residential investment rebounded in the second quarter ⁠after contracting for five straight quarters, the government reported last week. Renovations have ​risen as the higher borrowing costs depress demand for housing.

Investment in private nonresidential structures such as power plants and factories inched up 0.1% in June. ‌Spending on factory projects dropped 1.2%. Investment in nonresidential structures contracted in the second quarter, logging its ‌10th straight quarterly decline.

Investment in public construction projects was unchanged after increasing ⁠0.6% in May. State ‌and local government construction ​spending was unchanged in June. Outlays on federal government projects were also flat.

(Reporting by Lucia Mutikani; Editing by ‌Paul Simao)

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