Private Residential Construction Spending Dips in May
According to construction spending data from the U.S. Census Bureau, spending on private residential construction decreased by 0.2% in May following a 0.9% surge the previous month. However, spending remained 6.5% higher compared to the same time last year.
According to the NAHB, the monthly decline in total private construction spending for May is largely due to reduced spending on single-family construction. Spending on single-family construction fell by 0.7% in May, following a dip of 0.2% in April. Elevated mortgage interest rates have cooled the housing market, dampening home builder confidence and new home starts. Despite this, spending on single-family construction was still 13.8% higher than it was a year earlier.
Multifamily construction spending stayed flat in May after a dip of 0.4% in April. Year-over-year, spending on multifamily construction declined 4.6%, as an elevated level of apartments under construction is being completed. Private residential improvement spending increased 0.3% in May and was 2.8% higher compared to a year ago.
The NAHB construction spending index is shown in the graph below (the base is March 2000). The index illustrates how spending on single-family construction experienced solid growth since May 2023 under the pressure of supply-chain issues and elevated interest rates. Multifamily construction spending growth slowed after the peak in May 2023, while improvement spending has slowed since mid-2022.