Total private residential spending increased from the revised November estimate to a seasonally adjusted annual rate of $349.6 billion. The December month-over-month increase of 0.3% was driven by a large increase in the single-family component of private residential construction. Single-family spending increased 1.2% over the revised November estimate while multifamily spending increased 0.3%. Over the same period private construction spending on home improvements fell 1.3%.
NAHB analysis of total private residential found that on a 3-month moving average basis, from December 2013, single-family construction spending increased 12.3% and private construction spending on multifamily construction spending increased 27.6%. Over the same period private construction spending on home improvements decreased 27.5%.
The steady increase in single-family and multifamily construction spending is a reflection of improving market conditions. The single-family market recently experienced the highest pace of new home sales since June 2008. The multifamily market has experienced steadily rising rents and rental vacancy rates at a 20 year low.
The drop improvement spending is at odds with a number of other indicators of the health of the remodeling market. The NAHB RMI, which reports remodeler sentiment, remains strong and existing homes sales have improved significantly from the prior year. NAHB anticipates growth for the remodeling market in the upcoming year as a result of recent growth in existing home sales. We expect future data revisions for the improvement spending category of construction spending as a result.