NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $589.4 billion in August. It was up 3.7% over the upwardly revised July estimates. Total private residential construction spending was 6.7% higher than a year ago.
The monthly gain is largely attributed to the steady growth of spending on single family construction and home improvements. It is in line with the positive readings of single family starts in August and surging builder confidence. Spending on single-family construction rose 5.5% to a $287.9 billion annual pace, supported by the increasing demand amid the record low mortgage rates. Private residential improvements, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, was up 3.0% to a $216.1 billion annual pace in August. Multifamily construction spending dipped 0.1% to an $85.4 billion annual pace, after reaching a record high in July.
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 from the second half of 2019 to February 2020, before the COVID-19 hit the U.S. economy. New multifamily construction spending has picked up the pace after a slowdown from the second half of 2019.
Private nonresidential construction spending slipped 4.3% in August on an annual basis to a rate of $472.0 billion. The year-over-year nonresidential spending decrease was mainly due to lower spending on the class of office ($7.5 billion less), followed by education ($4.1 billion less), and lodging ($4.1 billion less).