Private Residential Spending Up 3.1% in December

NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 3.1% in December 2020 to a seasonally adjusted annual rate of $691.0 billion. Total private residential construction spending was 20.7% higher than a year ago.

The monthly gains are largely attributed to the strong growth of spending on single-family and improvements. Single-family construction spending rose to a $365.0 billion annual pace in December, up by 5.8%. It was 20.7% up from December 2020. This is in line with the strong readings of single-family housing starts. Remodeling spending, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, inched up by 0.4% in December. Meanwhile, multifamily construction spending inched up 0.1%, reaching a new record high. It was 17.8% higher since a year ago.

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 from the second half of 2019.

Private nonresidential construction spending decreased 1.7% to a seasonally adjusted annual rate of $446.6 billion. And it was 9.8% lower than a year ago. The largest contribution to this month-over-month nonresidential spending decrease was made by the class of manufacturing ($3.8 billion), followed by commercial ($2.2 billion), and lodging ($1.6 billion). —

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