The Commerce Department reported today construction spending fell to a 12-month low, led by a slowdown in both single and multi-family construction. This also marks three straight months of 

Real Estate Investing

construction spending declines. Real estate investors, especially those in multi-family, should welcome this news as competing projects will be stalled or scrapped altogether. The result will be fewer rental units as well as an increase in demand for rental housing, both single and multi-family.

An article here last week pointed out the weaker than expected Q2 GDP numbers as well as a downward revision for Q1 GDP surprised analysts. And depending upon your source, our current recovery is one of two of the weakest, albeit a long one. Yet, if GDP does go negative for Q3 and then again in Q4, that would officially label the economy back into a recession. That doesn’t appear to be a very strong possibility but then again the GDP numbers so far this year have been surprisingly tepid.

We’ll see how employers are viewing the economy this week as both the Unemployment Rate for July and the Non-farm Payroll numbers will be reported. In June, the economy produced a surprising 287,000 new jobs and economists are predicting a number somewhere closer to 180,000. The unemployment rate is also expected to fall slightly from 4.9% to 4.8%. For those who are expecting an interest rate increase sometime this year, they may have to wait a bit longer if non-farm payrolls come in closer to the 180,000 figure or lower. That will keep financing costs for single and multi-family projects in their current range well into 2016.