Private residential construction spending declined by 0.4% in January, largely driven by a decrease in multifamily construction and home improvement spending. This decline followed three consecutive months of growth, indicating a downward shift in the monthly data, according to analysis from the National Association of Home Builders. Despite the monthly drop, spending remains 3.1% higher than a year ago, showing the resilience of the housing market.
According to the latest U.S Census Construction Spending data, multifamily construction spending fell by 0.7% for the month, extending the downward trends that began in December 2023. This decline aligns with the weakness in the Multifamily Production Index (MPI) and a lower number of multifamily homes under construction. Improvement spending declined by 1.5% in January but was 14.3% higher compared to the same period last year. Meanwhile, spending on single-family construction rose by 0.6% in January, continuing its growth after a five-month decline from April to August. This growth also aligns with steady builder confidence seen in the Housing Market Index. However, single-family construction remained 0.9% lower than a year ago.
The NAHB construction spending index is shown in the graph below. The index illustrates how spending on single-family construction has slowed since early 2024 under the pressure of elevated interest rates and concerns over building material tariffs. Multifamily construction spending growth has also slowed down after the peak in July 2023. Meanwhile, improvement spending has increased its pace since late 2023.
Spending on private nonresidential construction was up 1.8% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($12.4 billion), followed by the power category ($5.5 billion).
Source: https://lbmjournal.com/private-residential-construction-spending-dips-3/