Ahead of the Bell: US construction spending
WASHINGTON (AP) — U.S. construction spending likely grew in July, reflecting slow improvement in home building.
Economists are predicting that construction spending increased 0.4 percent in July, matching June's gain, according to a survey by FactSet. The Commerce Department will release the report at 10 a.m. Eastern time on Tuesday.
An increase would mark the fourth straight month that construction spending has advanced. The gains have been driven by home building.
Still, the level of spending is roughly half of what economists consider to be healthy.
In a sign of the rebound in housing, a closely watched index of home prices show that home prices rose in June, compared to a year ago, the first time that has occurred since September 2010, a period when housing was benefitting temporarily from a tax credit that the federal government offered to home buyers.
The Standard & Poor's/Case Shiller home price index also showed prices in all 20 major American cities tracked by the index in June, compared to May, only the second straight month that all 20 cities registered price gains.
The rise in prices is helping bolster a fledgling housing recovery that began earlier this year. The National Association of Realtors reported sales of previously occupied homes jumped 10 percent in July compared with the same month last year. Sales of new homes rose 3.6 percent in July to match a two-year high reached in May.
Home builders have noticed the signs of improvement. A survey of builder confidence rose in August to its highest level since the housing market went bust five years ago. The gains in housing have been fueled in part by record low levels for mortgage rates. The average rate for a 30-year fixed rate mortgage has been below 4 percent all year.
Despite the modest gains in housing, the broader economy weakened in the spring. Overall economic growth slowed to an annual rate of just 1.7 percent from April through June, down from a 2 percent rate in the first three months of the year.
Economists don't look for much of a growth pickup in the second half of the year, forecasting growth will average 2 percent from June through December, an anemic pace that will not be enough to make much of a dent in unemployment, which stood at 8.3 percent in July.