NAHB analysis of Census Construction Spending data shows that total private residential construction spending increased 1.4% to a seasonally adjusted annual rate (SAAR) of $540.7 billion in December 2019. With the support of decreasing mortgage interest rates, it was the sixth consecutive monthly increase after declines in the first half of 2019. Nevertheless, the value of total private residential construction was $514.3 billion in 2019, 4.7% lower than a year ago.
The monthly increase is largely due to the solid growth of spending on single-family construction and remodeling. Single-family spending was at an annual pace of $289.3 billion, up 2.7% in December, and was 5.2% higher compared to a year ago. Private residential improvements, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, edged up 0.5% to a $193.7 billion (SAAR) in December. Multifamily construction spending slipped down 1.8% in December, following a dip of 0.1% in November.
The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates the solid growth in single-family construction and home improvement in the second half of 2019. New multifamily construction spending slowed down since August 2019, after the strong growth from 2010 to 2016 and a surge from the late 2018 to early 2019.
Private nonresidential construction spending declined 1.8% in December to a rate of $450.5 billion. It was slightly down by 0.1% on a year-over-year basis. The largest drag on growth was recorded by the class of commercial ($3.3 billion decrease), followed by amusement and recreation ($2.2 billion decrease) and educational ($2.0 billion decrease).