NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $511.4 billion in September, the highest level since December 2018. It inched up 0.6% in September, after increasing 0.8% in August and 1% in July. Private residential construction spending rebounded in the third quarter after decreasing for the first six months of this year, as mortgage interest rates declined.
The monthly gains are largely attributed to the strong growth of spending on single family. Single family construction spending jumped to a $274.6 billion annual pace in September, up 1.3% over the August estimates. It was the highest monthly annual rate since December 2018. Multifamily construction spending dipped 0.7% in September, but was 0.9% higher since a year ago. Spending on home improvements in September was not significantly different from the August estimates.
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 2016 and relatively flat afterwards. Improvement and single-family construction showed weakness over the last year.
Spending on private nonresidential construction declined 5.7 percent over the year to a seasonally adjusted annual rate of $450.3 billion. The annual nonresidential spending decline was mainly due to less spending on the class of commercial ($19.4 billion), followed by educational category ($2.9 billion), and amusement and recreation ($2.5 billion).