NAHB analysis of Census Construction Spending data shows that total private residential construction spending stood at a seasonally adjusted annual rate (SAAR) of $610.9 billion in September. It was up 2.8% over the August estimates, marking the fourth consecutive month of growth. Total private residential construction spending was 9.9% higher than a year ago.
The monthly gain is largely attributed to the steady growth of spending on single family and multifamily construction. It is in line with the strong readings of single family starts in September and historic climbing of builder confidence. Spending on single-family construction rose 5.7% to a $305.8 billion annual pace, supported by the increasing demand amid the record low mortgage rates. Multifamily construction spending inched up 1.2% to an $88.1 billion annual pace, reaching a record high in September. Private residential improvements, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, dipped 0.4% to a $217.0 billion annual pace in September, but was 11.1% higher since a year ago. .
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. New multifamily construction spending has picked up the pace after a slowdown from the second half of 2019.
Private nonresidential construction spending slipped 6.0% in September on an annual basis to a rate of $464.1.billion. The year-over-year nonresidential spending decrease was mainly due to lower spending on the class of manufacturing ($8.0 billion less), followed by power ($5.4 billion less), and office ($5.1 billion less).