NAHB analysis of Census Construction Spending data shows that total private residential construction spending fell 0.6% in May, the first decline after a strong start this year and the largest one since June 2014. The recent slowdown follows the housing starts declines over the three consecutive months. Nevertheless, the total private residential construction spending is 11.2% higher than a year ago.
The monthly declines are largely attributed to the slowdown of multifamily construction spending. It slipped 3.3% after a decrease of 0.2% in April, but was 3.0% higher since a year ago. Spending on single-family and home improvements halted their monthly gains in May, declining 0.3% and 0.1%, respectively. Nevertheless, on an annual basis, spending on single-family increased by 7.9%. Home improvement spending was 3.0% higher since May 2016.
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.
Private nonresidential construction spending slipped 0.7% on a monthly basis, however, it was 0.8% higher than a year ago. The largest contribution to this year-over-year nonresidential spending gain was made by the class of office (15.9%), followed by commercial (9.4% increase), and amusement and recreation (7.0% increase).