Residential Construction Spending Dips Slightly in June

Private residential construction spending was down 0.3% in June, after a dip of 0.7% in the prior month, according to the Census Construction Spending data. Nevertheless, it remained 7.3% higher compared to a year ago.

The monthly decline in total private construction spending for June was largely due to reduced spending on single-family construction. Spending on single-family construction fell by 1.2% in June, following a dip of 0.6% in May. This marks the third consecutive monthly decrease. Elevated mortgage interest rates have cooled the housing market, dampening home builder confidence and new home starts. Despite this, spending on single-family construction was still 9.9% higher than it was a year earlier.

Multifamily construction spending inched up 0.1% in June after a dip of 0.6% in May. Year-over-year, spending on multifamily construction declined 7.4%, as an elevated level of apartments under construction is being completed. Private residential improvement spending increased 0.6% in June and was 10.4% higher compared to a year ago.

The NAHB construction spending index is shown in the graph below (the base is January 2000). The index illustrates how spending on single-family construction and home improvements have slowed down the pace since early 2024 under the pressure of elevated interest rates. Multifamily construction spending growth slowed down after the peak in June 2023.

Spending on private nonresidential construction was up 4.2% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($37.6 billion), followed by the power category ($13 billion).