April Gains for Private Residential Spending

NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 0.9% in April after an increase of 0.7% in March 2022. Spending stood at a seasonally adjusted annual rate of $891.5 billion. Total private residential construction spending was 18.4% higher than a year ago.

These monthly gains are attributed to the strong growth of spending on improvements. Spending on improvements rose 1.5% in April, after a dip of 0.1% in March, as it was approaching summer, the best time of year to remodel. Single-family construction spending increased to a $477.7 billion annual pace in April, up by 0.5% over the upwardly revised March estimates. Multifamily construction spending rose 0.8% in April, after a decrease of 0.4% in March. Home building is still facing higher interest rates and supply-side headwinds.

The NAHB construction spending index, which is shown in the graph below (the base is January 2000), illustrates construction spending on single-family, multifamily and improvements have slowed down the pace since early 2022 under the pressure of supply-chain issues and elevated interest rates. Before the COVID-19 hit the U.S. economy, single-family construction and home improvement experienced solid growth from the second half of 2019 to February 2020, and the quick rebound since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019.

Private nonresidential construction spending decreased to $503.2 billion (SAAR) in April from the upwardly revised March estimates. And it was 10.1% higher than a year ago. The largest month-over-month nonresidential spending increase was made by the class of power ($1.6 billion), followed by transportation ($0.8 billion), and class of health care ($0.35 billion).