Residential Construction Spending Ends 2016 on High Note

NAHB analysis of Census Construction Spending data shows that total private residential construction spending grew 0.5% in December 2016 to a seasonally adjusted annual rate (SAAR) of $466.9 billion. After slowing in August and September the SAAR of spending on residential construction finishes 2016 with its third consecutive monthly increase.

Multifamily construction spending in December grew by 2.8% to a seasonally-adjusted annual rate of $63.7 billion, more than offsetting November’s decline. The SAAR of spending on new multi-family structures was 11.7% higher than one year prior, while single-family construction grew by only 0.3%. Compared to November, single-family construction spending was 0.5% higher, still slipped down by 0.9% over November 2015. Home improvement spending was the laggard in the month-over-month data, declining by 0.6%; though spending was still 6.6% higher than December 2015.

The NAHB construction spending index (below) shows the growth in residential construction spending since 2000. Beginning in August 2010—when the indices for single-family and multifamily spending converged—monthly growth of multifamily construction spending has doubled that of single-family spending, on average. During the same period, the month-over-month growth of spending on home improvements has averaged one-quarter that of spending on new multifamily construction.

The value of all private residential construction put in place reached $456.2 billion (not seasonally adjusted) in 2016, 5.2% higher than the total for 2015 ($433.7 billion). Similarly, spending on nonresidential structures grew to $420.1 in 2016, 7.8% higher than one year prior. Construction of office, lodging, and amusement and recreation structures fueled the annual increase, growing by 29.5%, 26.4%, and 22.4%, respectively.

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