Private Residential Spending Dips Slightly in February

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NAHB analysis of Census Construction Spending data shows that total private residential construction spending fell 0.2% in February to a seasonally adjusted annual rate of $718 billion, after reaching a record high in January 2021. It is in line with the slow pace of housing starts in February and recent softening of the NAHB/Wells Fargo Housing Market Index. Total private residential construction spending was 21% higher than a year ago.

The monthly drop is largely driven by spending declines in multifamily construction and improvements, while single-family construction spending rose only slightly. Single-family construction spending edged up by 0.1% to a $376.8 billion annual pace in February. Multifamily construction spending slid 1.4% in February but was 14.6% higher than a year ago. Remodeling spending, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, declined 0.2% to a $248.0 billion annual pace in February.

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 then followed by a quick rebound since July 2020. New multifamily construction spending has picked up the pace after a slowdown from the second half of 2019.

Private nonresidential construction spending declined 1% to a seasonally adjusted annual rate of $447.8 billion. The largest contribution to this month-over-month nonresidential spending decrease was made by the class of healthcare ($1.7 billion), followed by commercial ($0.9 billion), and lodging ($0.8 billion).



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