NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 2.5% in January to a seasonally adjusted annual rate of $713 billion, reaching a record high. Total private residential construction spending was 21% higher than a year ago.
The monthly gains are largely attributed to the strong growth of spending on single-family and improvements. Single-family construction spending rose to a $376.2 billion annual pace in January, up by 3%. It was 24.2% up from January 2020. Remodeling spending, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, rose 2.3% in January, and was 17.9% over a year ago. Meanwhile, multifamily construction spending inched up 0.7%, but still posted net gains, being 16.9% higher than a year ago.
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, and the subsequent quick rebound since July 2020. New multifamily construction spending has picked up its pace after a slowdown from the second half of 2019.
Private nonresidential construction spending edged up 0.4% to a seasonally adjusted annual rate of $447 billion. However, it was 10.1% lower than a year ago. The largest contribution to this month-over-month nonresidential spending increase was made by the class of manufacturing ($3.0 billion), followed by healthcare ($0.4 billion), and communication ($0.2 billion).