Multifamily Construction Spending Hits New Record High in December

Multifamily construction spending increased 3.1% to a $65.2 billion annual pace, reaching a record high

Multifamily Construction Istock Gettyimages 000003956784
Nahb 10845102

National Association of Home Builders (NAHB) analysis of Commerce Department construction spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $536.7 billion in December. It was down 1.4% after a 3.4% increase in November. On a year-on-year basis, total private residential construction spending fell 1.3% in 2018, the first annual decline since 2011. However, multifamily construction spending hit a new record high, reaching $65.2 billion in December.

The monthly decline is largely due to the drop of spending on single-family construction and remodeling. Single-family spending fell 3.2% in December and was 5% lower compared to a year ago. This decline in single-family spending mirrors the steady decline in single-family starts and the weakness of the NAHB/Wells Fargo Housing Market Index (HMI). Spending on improvements slipped slightly 0.4% in December, but it rose by 1.8% annually in 2018. Multifamily construction spending increased 3.1% to a $65.2 billion annual pace, reaching a record high.

The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the strong growth in new multifamily construction since 2010 and a more modest growth in single-family construction and home improvement spending.

Nahb Multi SpendNational Association of Home Builders

Private nonresidential construction spending edged up 0.4% to a rate of $454.5 billion. Moreover, it was 3.4% higher than a year ago. The largest contribution to this year-over-year nonresidential spending increase was made by the class of power facilities ($7.3 billion increase), followed by office ($4.6 billion increase) and manufacturing ($3.6 billion increase).

Nahb Construct SpenNational Association of Home Builders