Construction Spending Drops in July

Construction spending in the U.S. showed a surprise 0.6% decline in July, as spending in both residential and commercial construction tapered in the month, the Commerce Department reported Tuesday.

The decline in July follows a 0.3% increase in June and marks a sharper decline than the 0.4% drop economists were expecting. Residential construction fell 2.3%, and non-residential spending fell 0.7%.

The fresh data appeared to have little effect on the direction of homebuilder stocks early in the session Tuesday. Howewver, in recent afternoon trading they were mostly trading higher: DR Horton (DHI Quote - Cramer on DHI - Stock Picks) was up 3% at $12.84, Centex (CTX Quote - Cramer on CTX - Stock Picks) was up 1.3% at $16.44, Pulte (PHM Quote - Cramer on PHM - Stock Picks) was up 1.5% at $14.72, and Toll Brothers (TOL Quote - Cramer on TOL - Stock Picks) was roughly flat at $24.89. The SPDR S&P Homebuilders ETF (XHB Quote - Cramer on XHB - Stock Picks) was recently up 2.5% at $20.23.