Spending on U.S. construction projects is holding up better than expected, thanks to outlays on office buildings, lodging and power plants, but it is likely to falter in the coming months.

U.S. construction spending fell at a seasonally adjusted 0.6% annual rate in November to $1.078 trillion, the Commerce Department said Monday, following a revised October decline of 0.4% that was smaller than originally reported.

Residential spending fell at a 4.1% rate in November to $336.3 billion, 22.8% lower than November 2007. Despite the credit crunch and worsening economy, nonresidential spending showed surprising resilience, rising 1% during the month to $742.1 billion, up 9.2% from the previous year.

Outlays increased for power plants, roads, public-safety facilities, hotels and office buildings, but economists say the boost will be fleeting as new investments dry up.

Wachovia Corp. economist Anika Khan said rising oil prices in the first half of 2008 spurred construction activity at power plants and some manufacturers, but that is expected to reverse as those industries now grapple with sharply lower oil prices and weak customer demand.

Public construction spending rose 1.4% in November to $322 billion, another bright spot, although the U.S. recession is hurting governments' tax revenues. Expected declines there stemming from budget cuts could be offset later this year by a stimulus plan aimed at funding government construction projects.

If you purchase real estate and place the property inside your IRA, you do not own it; your IRA owns the property. Since qualified plan law governs your IRA, the owner must adhere to Internal Revenue Service guidelines. Investment restrictions, custodial fees, distribution rules and, ultimately, income taxes must be paid. All proceeds must go back into the IRA and occupancy is not an option. In addition, if the real estate is a rental property, for compliance purposes, your custodian will appoint a property manager. If loans are used, the loan must be a nonrecourse loan (secured by the property but no recourse on any other assets). Commercial lenders usually do not engage in these types of loans, so the private sector (private investors, owner/seller financing, etc.) is your best option

The second way an IRA owner can use an IRA to purchase property is for the real estate to be purchased outside the IRA and owned outright. This approach is more traditional because the individual owns the real estate and therefore holds title. Since the individual owns the real estate, real estate law governs the owners investment. Real estate law is more consumer friendly, and the real estate can qualify for long-term capital gains income tax treatment and many other financial and economic benefits. Depreciation, additional write-offs, income flexibility and a stepped-up income tax basis are possible. The use of 1031 Tax Deferred Exchanges and/or the Personal Residence Exclusion are now possibilities.

An IRA can completely or partially fund a real estate purchase. In addition, you can purchase and own the property outright or share ownership with other IRA and non-IRA owners.

Many people have not heard that purchasing real estate via an IRA is a possibility and certainly are not aware that there are two possible ways to make this type of purchase. Both approaches have been around for many years, and real estate gives the investor options other than stocks, mutual funds, money markets and certificates of deposit.

"Interest rates for 30-year fixed-rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971," said Frank Nothaft, Freddie Mac chief economist. "The decline was supported by the Federal Reserve announcement on Dec. 16, when it cut the federal-funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant."

The 30-year mortgage fell for a seventh consecutive week, from 5.47% a week ago. A year ago the 30-year averaged 6.14%.

The 15-year fixed-rate mortgage averaged 4.92%, down from last week when it averaged 5.20%. A year ago the 15-year loan averaged 5.79%. The 15-year mortgage hasn't been lower since April 1, 2004, when it averaged 4.84%.

Some Positive Real Estate Talk

Though the economic news in the media is gloomy, the real estate market is actually stacking up quite well for buyers right now, particularly ones that do not have to first sell a home. Just last week interest rates dipped down about 1% from 6.75% down to around 5.75%. Real estate sales in our market had been strong from the middle of June through the end of August. Seasonally, Sellers tend to be the most motivated this time of year – making this a good time to negotiate a more aggressive purchase. The fact that a Seller’s home did not sell in the last three months when sales were up should add to a Seller’s motivation. Inventory is still plentiful, offering the ability for Buyers to shop and be selective. Last but certainly not least, the Federal Government's $7500 First Time Home Buyer Tax Credit is still in place. To receive this benefit on the Buyer’s tax return in April of 2009 however, a purchase and closing needs to be made by the end of 2008. Otherwise the buyer would need to wait a year longer for the tax credit.