A modest rise in construction spending in February was powered largely by private residential gains, with home improvements and single-family building reversing prior stagnation. Total spending edged up 0.7% from January and is now 2.9% higher than one year ago, according to the U.S. Census Bureau.
Residential construction, long pressured by high mortgage rates and affordability concerns, posted a 1.3% monthly increase in February, outpacing the overall market. The boost came primarily from private residential improvements and new single-family homes, which grew 1.0% in February and held steady year-over-year, suggesting tentative momentum despite interest rate headwinds.
Multifamily construction, however, remained flat month-over-month and continued its retreat from pandemic-era highs, down 11.6% from February 2024. This marks nearly a full year of annual declines in multifamily spending, as developers recalibrate amid rising construction costs and softening urban rental demand.
In contrast, public construction remained largely stable, ticking up just 0.2% from January. Still, key subcategories showed strength: water supply projects jumped 1.6% in February and surged nearly 16% year-over-year, while sewage and waste disposal rose 11.1% over the year. These increases may reflect delayed infrastructure investments catching up following federal stimulus allocations.
The construction market’s uneven recovery highlights both resilience in certain housing segments and ongoing caution in large-scale development. While residential improvements hint at renewed homeowner confidence, multifamily’s decline suggests developers remain wary of oversupply or unfavorable financing.