Construction spending slides 1.9% as mortgage rates weigh on homes
Spending on multifamily units edged up 0.1%, though the segment accounts for a modest share of total construction output.
Private nonresidential structures rose 1.1%, supported by a 1.2% gain in power plant investment, while public construction dipped 0.1% — state and local government outlays fell 0.3% as federal project spending jumped 2.5%.
War-driven rate surge dims broker pipeline
The residential pullback in the third quarter of 2026 traces directly to the mortgage rate surge triggered by the outbreak of the US-Israeli war with Iran in late February, which stoked inflation and pushed borrowing costs sharply higher.
Data from mortgage finance firm Freddie Mac show the average 30-year fixed-rate mortgage has climbed by at least 125 basis points since the conflict began, a move that has kept the U.S. housing market subdued through 2026 and compressed origination pipelines for mortgage brokers nationwide.
The September data points to a housing sector that has struggled to find footing throughout the year, as rate volatility has repeatedly undercut early-year momentum.
