Multifamily Construction Spending Reaches Record High in November

NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $542.5 billion in November. It was up 3.5% this month after three consecutive monthly decreases. Total private residential construction spending was 0.8% higher than a year ago.

The monthly gain is largely attributed to the steady growth of spending on multifamily construction. It is in line with the strong readings of multifamily housing starts in November. On a monthly basis, multifamily construction spending rose 2.6 percent to a $64.7 billion annual pace, reaching a record high. Remodeling spending increased 12.2% in November after a modest dip of 3.2% in the past month. However, single-family spending experienced a decline of 1.8% and was 1.0% lower since a year ago. The slip in single-family spending mirrors the steady decline in single-family starts.

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 1.2% to a rate of $451 billion. However, it was 4.2% higher than a year ago. The largest contribution to this year-over-year nonresidential spending increase was made by the class of power ($7.5 billion increase), followed by office ($6.0 billion increase), and lodging ($4.1 billion increase).



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