A National Association of Home Builders (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 % 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.
National Association of Home Builders
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).