NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $546.6 billion in July. It was up 2.0% this month after four consecutive monthly decreases. Total private residential construction spending was 0.5% higher than a year ago.
The monthly gain is largely attributed to the steady growth of spending on single family and multifamily construction. It is in line with the positive readings of single family and multifamily housing starts in July. Spending on single-family construction rose 3.1% to a $268.0 billion annual pace, supported by the increasing demand amid the record low mortgage rates. Multifamily construction spending rose 4.9 % percent to an $85.8 billion annual pace, reaching a record high. Private residential improvements, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, dipped 0.5% to a $92.8 billion annual pace in July.
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. New multifamily construction spending has picked up the pace after a slowdown from the second half of 2019.
Private nonresidential construction spending slipped 4.3% in July on an annual basis to a rate of $466.9 billion. The largest contribution to this year-over-year nonresidential spending decrease was mainly due to lower spending on the class of commercial ($2.6 billion less), followed by health care ($1.3 billion less), and lodging ($0.5 billion less).