Doctors – Keeping you updated on the market!
April 8, 2019
Doctors: Led by government spending, U.S. construction rises to nine-month high in February
U.S. construction spending rose 1% in February, following an upwardly revised 2.5% surge in January, the Commerce Department said in a report.
The value of all construction put in place during February increased to a seasonally adjusted $1.32 trillion, the highest level since May 2018, the report said. Homebuilding rose 0.7% to $540.9 billion, while government spending jumped 3.8% to $303 billion.
“The numbers are clearly better than expected, and they included fantastic upward revisions to January,” said Christopher Low, chief economist with FTN Financial in New York.
The boost in residential construction spending along with falling mortgage rates signal the next few months may be a strong period for home sales, he said.
“For builders to come back like this, they must be optimistic for a reason,” Low said. “After coming out of a period of weakness at the end of last year, they must sense stronger demand.”
State and local government construction spending rose 3.8% after soaring 5.7% in January. Federal construction projects rose 0.9% to the highest level since October 2017. Spending on private nonresidential buildings, such as power plants, fell 0.5% in February after gaining 1.1% in January.
Looking Ahead: Upcoming Key Market Dates
With Mortgage Rates at a Low, Loan and Refinance Applications Surge
As mortgage interest rates dropped to their lowest levels in over a year last week, home owners and buyers raced to submit their refinance and other loan applications before rates start going up again.
The number of overall mortgage applications surged 28.4% last week compared with the previous year, according to the Mortgage Bankers Association. They were up 18% over the previous week.
Refinance applications, in which homeowners will typically try to lock in lower rates, shot up the most, an astounding 58% from a year ago. They also jumped 38.5% from the prior week.
Meanwhile, purchase applications, for the loans used to buy a home, were up 9.8% from a year ago and rose 4.1% from the previous week.
“Customers, especially in the refi market, are really interest-rate sensitive,” says realtor.com®’s chief economist, Danielle Hale. “It generally makes sense [for homeowners to refinance their mortgages] if you’re getting a lower interest rate because that’s what’s really going to save you money.”
But refinancing a mortgage isn’t cheap. There are all sorts of costs associated with it, so it only makes sense if folks plan to stay in their abodes for at least the next few years.
The lower rates are also a windfall for cost-sensitive home buyers who worry about struggling to make high monthly mortgage payments.
“Purchase applications have now increased year-over-year for four weeks, which signals healthy demand entering the busy spring buying season,” Joel Kan, the Mortgage Bankers Association associate vice president of economic and industry forecasting, said in a statement.