Source: Economics Group of Wells Fargo Bank, N.A.
Summary
High Rates Suppressing Construction
The elevated interest rate environment continues to exert pressure on construction. Total construction spending fell 0.1% in July, amounting to a 2.8% year-over-year decline.
Residential spending increased modestly during the month, largely on account of a slight upturn in single-family outlays. Since the spending data do not account for material and labor price changes, it is too soon to say that the recent downdraft in single-family activity has bottomed. Rather, weakening permit activity and low builder sentiment suggests single-family construction is still trending lower against a backdrop of stagnant new home sales and elevated inventories in key builder markets.