Construction spending in the U.S. hit a 17-month high during November as residential development showed signs of strength, according to census data released Tuesday.
Overall spending rose 1.2 percent from this past October and 0.5 percent from November 2010. Most notable was single-family spending, which jumped 1.5 percent from October.
Mark Vitner and Anika Khan, economists for Wells Fargo Securities, called the increases in single-family construction "impressive."
While home building has fallen drastically in the past few years, many Twin Cities builders have said interest in new construction has picked up as housing inventory dwindled. Across the nation, the supply of homes on the market has declined as prospective sellers hold on to properties until the market rebounds.
The census report also said multifamily spending got a boost, rising 1.3 percent from October.
Apartment building construction has jumped as the foreclosure crisis has forced more people to rent. Construction for rental units also dried up during the housing boom, creating a need to build more apartments.
Patrick Newport, an economist with IHS Global Insight, said he expects modest growth in residential spending during the first half of the year, with double-digit growth coming during the second half.
The Associated General Contractors of America, a trade group that represents both residential and commercial contractors, said that among nonresidential projects, the gains were led by a 13 percent increase in manufacturing and a 12 percent increase in commercial projects.
The association's chief economist, Ken Simonson, warned that delays in enacting various infrastructure bills and planned cuts to federal construction programs could threaten spending in the coming year, reversing recent gains.
"The new year should reinforce recent year-over-year gains in apartment, power, manufacturing and private transportation construction," he said. "But November's upturns in single-family homebuilding and public construction may not be sustainable."
Jim Buchta • 612-673-7376