Private Residential Spending Reaches Cycle High

NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 0.5% in December to a seasonally adjusted annual rate of $526.1 billion, the highest level since March 2007. Total private residential construction spending rose 6.2% last year, after increasing 12.5% in 2016.

The monthly gains are largely attributed to the increase in multifamily construction spending. It rebounded strongly 2.6% after a dip of 0.5% in November, reaching a $64.0 billion annual pace in December. Single-family construction spending inched up 0.4%, after surging 2% in November. Remodeling spending slipped slightly 0.2% in December. On a year-over-year basis, spending on home improvements increased by 3.2%.

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 from 2010 to April 2017, and a steady growth in single-family construction and home improvement spending.

Spending on private nonresidential construction increased 1.1% in December after climbing 0.3% in the prior month. The largest contribution to this month-over-month nonresidential spending increase was made by the class of office ($2.5 billion), followed by commercial ($1.3 billion), and education ($0.9 billion). Private nonresidential construction spending was 2.5% lower than a year ago, driven by the declines in spending on power and manufacturing.



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