WASHINGTON(Reuters) - U.S. construction spending fell in October, pulled down by continued weakness in single-family homebuilding amid higher mortgage rates.
The Commerce Department said on Thursday that construction spending dropped 0.3% in October after gaining 0.1% in September. The decrease was in line with economists' expectations. Construction spending increased 9.2% on a year-on-year basis in October.
Spending on private construction projects dropped 0.5% after being unchanged in September. Investment in residential construction slipped 0.3%, with spending on single-family housing projects tumbling 2.6%. Outlays on multi-family housing projects rose 0.6%.
The housing market is reeling from the Federal Reserve's fastest rate-hiking cycle since the 1980s as it battles inflation. The 30-year fixed mortgage rate breached 7% in October for the first time since 2002, data from mortgage finance agency Freddie Mac (OTC:FMCC) showed.
Though the rate has retreated to average 6.58% last week, it remains well above the 3.10% average during the same period last year. Residential investment has contracted for six straight quarters, the longest such stretch since the housing market collapse in 2006.
In October, spending on private non-residential structures like gas and oil well drilling dropped 0.8%. Outlays on non-residential structures have also declined for six straight quarters.
Spending on public construction projects rose 0.6% in October after increasing 0.8% in September. Investment in state and local government construction projects gained 0.1%, while federal government construction spending shot up 7.1%.