Private Residential Spending Stays Strong, 19.3% Higher YOY

NAHB analysis of Census Construction Spending data shows that total private residential construction spending decreased 0.4% in September to a seasonally adjusted annual rate of $773.5 billion. Total private residential construction spending was 19.3% higher than a year ago.

Spending on single-family, multifamily constructions and improvements all declined in September, as homebuilding is still facing the supply chain issues, the rising material costs and labor shortages. Single-family construction spending decreased to a $412.7 billion annual pace in September. It was down by 0.6% after a dip of 0.5% in August. Multifamily construction spending dipped 0.3% in September. Compared to a year ago, single-family construction spending was up 30.4% and multifamily spending increased 10.5%.  Spending on improvements dipped 0.1% in September, after an increase of 1.1% in August.

The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the solid growth in single-family construction and home improvement from the second half of 2019 to February 2020, before the COVID-19 hit the U.S. economy, and the quick rebounds since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019.

Private nonresidential construction spending slipped to a seasonally adjusted annual rate of $456.4 billion in September, a 0.6% decline from upwardly revised August estimates. And it was 0.5% lower than a year ago. The largest contribution to this month-over-month nonresidential spending decrease was made by the class of power ($1.23 billion), followed by manufacturing ($1.19 billion), and class of health care ($0.48 billion).