Rising Private Construction Spending in the Housing Market
Private residential construction spending rose by 1.5% in October, as reported by the latest U.S. Census Construction Spending data. Compared to the same month last year, there was a 6.4% increase.
The monthly growth in private construction spending mainly came from higher expenses on residential improvements. Spending on improvements jumped by 2.7% in October and was up by 18.5% from a year earlier.
Spending on single-family homes increased slightly by 0.8% for the month. This uptick follows a five-month decline from April to August and reflects growing builder confidence. Year-over-year, spending on single-family homes was 1.3% higher.
On the other hand, spending on multifamily construction broke a ten-month downward trend, rising by 0.2% in October. Despite this small gain, multifamily construction spending is still 6.8% lower compared to last year.
The NAHB construction spending index illustrates that single-family construction spending has slowed since early 2024 due to high interest rates. Growth in multifamily construction spending has also dwindled since its peak in July 2023. Meanwhile, spending on improvements has picked up since late 2023.
In the nonresidential sector, private construction spending increased by 3.5% year-over-year. This rise was largely driven by higher spending in manufacturing, totaling $32.9 billion, followed by the power category at $6.4 billion.