Single-family Construction Spending Declines Again

According to estimates from Census Construction Spending data, total private residential construction spending edged down 0.3% in August to a seasonally adjusted annual rate of $449.2 billion. The record-breaking gains registered by multifamily construction were not enough to offset the declines in both single-family and home improvement spending.

Multifamily construction spending rose to $62 billion, exceeding the peak readings registered in March 2016. However, this new record high in multifamily construction, which was up 2.4% over last month, was offset by declines in single-family construction and home improvement spending. Single-family construction spending decreased to $235.7 billion, down by 1% since July, reflecting the pause in single-family housing starts in August. It is the sixth consecutive month single-family construction spending has declined. Home improvements edged down to $151.5 billion, 0.3% below the upwardly revised July estimates.

On an annual basis, single-family spending slipped down by 1.5%for the first time since the housing recovery period. Multifamily spending, however, was 13.9% higher since August 2015. Spending on home improvements increased by 1.5% on a year-over-year basis.

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, while new single-family construction spending has slowed down.

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The pace of private nonresidential construction spending declined 0.4% on a monthly basis, however, was 4.2% higher than the August 2015 estimate. The largest contribution to this year-over-year nonresidential spending gain was made by the class of office (28.0% increase), followed by amusement and recreation (18.8% increase) and lodging (17.7% increase).

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