Eye On Housing
NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $523.1 billion in July, 0.8% up from upwardly revised June estimates. It was the third consecutive monthly increase after a dip in April. The total private residential construction spending was 11.6% higher than a year ago.
The monthly gains are largely attributed to the steady growth of spending on single-family construction and home improvement. Single-family construction spending stood at $264.1 billion, 0.8% up from the revised June estimate. Spending on improvements rose to $192.4 billion, up by 1.41% over last month, and was 16.5% higher since July 2016. Spending on multifamily construction slipped 0.8% after a decrease of 1.8% in June, but was 3.0% higher since a year ago.
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 dropped 1.7% on a monthly basis. It was 3.6% lower than a year ago. The largest contribution to this year-over-year nonresidential spending decline was made by the class of manufacturing (-15.7 %), followed by religious (-11.7%), and educational (-8.8%).
I think a lot of the recent private residential construction activity has come from loft conversions and home extensions. As you mentioned, specifically single-family homes need more space for growing families and apart from extensions (which you can only do so many of), loft conversions eventually become the final option. This is a good thing for builders and real estate agents, as the more bedrooms you can fit onto the home, the more expensive they will become. Just need to find the right line between profit increase and affordability for homeowners.