Ahead of the Bell: US construction Spending

WASHINGTON -- Builders likely increased construction activity in December, helped in part by warmer than normal weather.

Economists forecast that construction spending rose 0.7 percent in December, according to a survey by FactSet.

In November, construction spending declined 0.3 percent compared to October because of a steep drop in the volatile category of federal projects.

But spending on residential construction has risen for the past eight months, reflecting the start of a housing recovery.

A separate report showed that builders started work on 780,000 homes in 2012. That's still just half of the annual number of starts consistent with healthier markets. But it is an increase of 28.1 percent from 2011. And it is the most since 2008, two years after the housing market began to collapse following the boom years in the middle of the last decade.

Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped to boost home sales and prices in most markets.

That has persuaded builders to start more homes, which adds to economic growth and hiring.

Though new homes represent less than 20 percent of the housing sales market, they have an outside impact on the economy. Each home build creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Home Builders.

For 2012, residential housing construction grew at an annual rate of 11.9 percent and added about 0.3 percentage point to total economic growth, marking the first positive contribution from the housing sector to overall growth since 2005.