Mortgage Professionals Should be Optimistic About the Future

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56 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ANALYTICS the latest construction spending Up 1.1% pickup in homebuilding activity for private residences credited for increase in overall expenditures. c onstruction spending saw a substantial increase in October, advancing on solid gains in homebuilding outlays. In a report issued last month, the Commerce Department estimated construction spending at a seasonally adjusted annual rate of $971 billion, an increase of 1.1 percent from September's revised estimate of $960.3 billion. Compared to a year earlier, October's rate of spending was up 3.3 percent. A large share of October's increase stemmed from residen- tial projects, for which spending rose 1.3 percent from September, hitting an adjusted yearly rate of $359.1 billion. In the pri- vate sector, spending on home construction climbed 1.3 percent, rising for both single-family (1.3 percent) and multifamily (1.8 percent) projects, which com- bined for an annual rate of $353.8 billion. Despite the promising gains, economists Patrick Newport and Stephanie Karol at IHS Global Insight called October's residential construction numbers "deceptively strong." "The figure for single-family construction depends on that month's average single-family home price," the pair said in a note to clients. "That number launched itself into outer space in October. ... While this will make fourth-quarter construc- tion spending figures shine, we believe this is an anomaly caused by sampling issues, rather than true, sustainable strength." Meanwhile, spending on public residential construction dropped 2.2 percent month-over- month, declining to an annual adjusted rate of $5.3 billion. That dip was offset by gains across nearly all categories of nonresi- dential construction, led by dou- ble-digit increases in commercial and public safety projects.

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