U.S. construction spending was flat in May with homebuilding falling again, even as buyers face climbing prices and a shortage of available properties on the market.
The Commerce Department reported on Monday no increase in construction spending in May, which follows a report two weeks ago showing that housing starts fell for the third straight month.
Economists have been expecting housing construction to play a key role in supporting overall economic growth in 2017 as demand for homes rises amid low unemployment and rising incomes. However, many buyers have been frustrated by limited inventory and rising prices.
Private residential construction fell 0.6 percent in May, the first decline in that category since April 2016 and its biggest decline since a 0.6 percent drop in July 2014. Non-residential construction declined 0.7 percent, the fifth straight monthly decline for the category.
Overall construction spending was reported at a seasonally adjusted annual rate of $1.23 trillion, the same as last month’s revised figure.
The flat May number follows April’s decline of 0.7 percent, which was revised from an originally reported drop of 1.7 percent. Analysts last month said they thought April’s dismal number was an anomaly and had expected a modest rebound in May, which could still happen with revisions next month.
“Construction activity, unfortunately, continues to disappoint,” said Jennifer Lee, an economist with BMO Capital Markets. “If June is flat again, that would mean a negative quarter for construction.”
Government construction spending rose at the state and federal levels after declines last month. State and local government construction rose 1.7 percent after last month’s decline of 2.7 percent. Federal government construction also rebounded, rising 6.4 percent after a decline of 2.1 percent in April.
Construction of manufacturing facilities dipped 1.7 percent in May and is down 10.7 percent from the same month last year.