Pace of Residential Construction Spending Continues Positive Trend

Private residential construction got off to an auspicious start in 2017, continuing the growth trend that began in October of last year.  NAHB analysis of Census Construction Spending data shows that total private residential construction spending grew 0.5% in January 2017 to a seasonally adjusted annual rate (SAAR) of $476.4 billion.

Multifamily construction spending in January grew by 2.2% to a seasonally-adjusted annual rate of $63.5 billion, more than double that of December. The SAAR of spending on new multi-family structures was 9.0% higher than one year prior, while single-family construction grew by 2.3%. Compared to last month, single-family construction spending was 1.4% higher. The monthly change in home improvement spending lagged, declining by 1.5%, though ups and downs in these data should be viewed with some caution.  Of the three construction spending categories, home improvements data are the most volatile but the trend has been positive overall since 2013.

The NAHB construction spending index (below) illustrates this four-year trend in home improvement spending as well as the growth in residential construction spending since 2000.  Beginning in August 2010—when the indeces 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.

Spending on private nonresidential structures grew to a seasonally adjust annual rate of $435.4 billion in January, essentially unchanged from the December rate of $435.3 billion.  The rate of overall construction spending slowed, driven by a double-digit percentage decline in public nonresidential construction.  The seasonally adjusted annual rate of public nonresidential and residential spending declined by 15% and 5%, respectively.



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