WASHINGTON -- U.S. construction spending rose modestly in December, slowing from healthy gains a month earlier. The Commerce Department said Monday that construction spending increased a scant 0.1 percent to a seasonally adjusted annual rate of $930.5 billion, down from a revised 0.8 percent increase in November. The December increase was driven by a 2.6 percent rise in private residential construction, which hit an annual pace of $352.6 billion, highest since June 2008.
Spending on single-family homes rose 3.4 percent in December and 21.6 percent from a year earlier. More than two-thirds of the residential construction market comes from single-family homes. Each new home creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to National Association of Home Builders.
Construction of apartments and condominiums was up 0.5 percent in December and up 27.3 percent from December 2012. Rising home prices have encouraged more people to rent instead of buy, encouraging developers to build more apartments. After recovering from the depths of the Great Recession, home sales have stalled recently, pinched by higher prices and higher mortgage rates.
The National Association of Realtors last week said its seasonally adjusted pending home sales index dropped 8.7 percent last month to 92.4. That's the seventh straight monthly decline for the index, which previews upcoming sales. A one- to two-month lag usually exists between a signed contract and a completed sale. In addition to rising mortgage rates and home prices, cold weather in December also stalled home purchases.
In December, construction of commercial projects -- including hotels, shops and offices -- fell 0.7 percent and was down 1.7 percent from a year earlier. Government construction was also down.
SIZABLE HOMES IN SMALLER MARKETS, FOR UNDER $100,000:
The small town of Rock Island, Ill., is part of the Quad Cities about 175 miles west of Chicago, has a population of about 39,000. There’s a wide variety of housing available in Rock Island including historic homes, downtown condos, new construction in the heart of the city, and wooded retreats. And the prices vary, from a $1.45 million "House on the Hill" overlooking the Rock River Valley, to this three-bedroom, three-bath one pictured for under $100,000.
List Price: $99,900 - The brick "Magill House" at 2,253-square-feet is a registered historic home. Built in 1868 in the Italianate style, it was revived in 1992 with updates and additional improvements. There is a beautiful, winding wood staircase, hardwood floors on the main level, a master bath, a breakfast nook, built-ins, and heated three-car garage.
Spokane, home of the 1974 World's Fair, sits in the county seat of the same name. With just more than 200,000 residents, it is second largest city in the state of Washington but still small enough to rank low among major cities, giving residents the best of both worlds.
List Price: $99,500 - This updated Craftsman on the north side of town is nestled on the corner of a tree-lined street in a quiet neighborhood, according to its listing. At 3,054 square feet, this four-bedroom home is bigger than it might first appear and even has two rental units on site.
List Price: $118,840 - This three-story brick, historic federal-style farmhouse with a Dutch roof has been restored. It has six bedrooms, three baths, hardwood floors, and a front and a rear stairway. There are two cement patios, and one of them is fenced.
Omaha is the largest city in Nebraska, but is No. 42 on the list of largest U.S. cities, behind Mesa, Ariz., and Virginia Beach, Va. The city is also home to one of the wealthiest men in the world, Warren Buffet, who lives in one of the most modest homes for his status, as HuffPost Home has reported. The Wizard of Omaha has said "a house can be a nightmare if the buyer's eyes are bigger than his wallet."
List Price: $100,000 - One of the smallest on our list, this 1,025-square-foot single-family home (pictured) has three bedrooms and two bathrooms. Built in 1964 it has a tuck-under garage. However, we can't guarantee that if you buy it, you'll also gain even a quarter of Buffett's wealth.
Mobile goes by the slogan "secretly awesome," according to its tourism website, and is near Pensacola, Fla. It was also recently ranked No. 2 in U.S. metro cities with the highest economic growth potential by Business Facilities magazine, coming in behind Baton Rouge, La.
List Price: $69,900 - At 2,300-square-feet, this four-bedroom home has so much space for the money. The large living room leads to the family room with a gas-log fireplace. Its family room opens up to the kitchen and dining area, according to the listing. Out back, a patio leads to a guest apartment, which has a full bath and a kitchenette.
Louisville is home to the Kentucky Derby and the Muhammad Ali Center. The city also recently noted on its website that it has regained all 42,000 jobs that were lost during the recession. Louisville is outperforming several peer metro areas in post-recession job growth. Among the 100 most populated metro areas, the Louisville metro area ranked 26th in recovering from the recession, according to the Brookings Institution's Metro Monitor.
List Price: $100,000 - With three bedrooms, two full baths and hardwood floors, this pictured home has a large living room that goes across the whole front of the house. There is also a two-sided staircase, and a full bath on each floor. "The large backyard is perfect for family gatherings," says the listing.
Ranked at number 12 among the DMAs, it is hard to call Indianapolis a small town, but this Midwestern city about a two-hour drive from the Chicago metro area does have a small city feel, in comparison.
List Price: $100,000 - With 3 bedrooms and 2,635 square feet, this home is a bargain for a city of its size. Built in 1922, it has a covered porch, hardwood floors and stairs.