Private Residential Construction Spending Inches Down in July

Private residential construction spending fell 0.4% in July, according to the Census Construction Spending data. Nevertheless, spending remained 7.7% higher compared to a year ago. The monthly decline in total private construction spending for July was largely due to reduced spending on single-family construction. Spending on single-family construction plunged by 1.9% in July, following a dip of 1.1% in June. This marks the fourth consecutive monthly decrease. Elevated mortgage interest rates have cooled the housing market, dampening home builder confidence and new home starts. Despite these challenges, spending on single-family construction was still 4% higher than it was a year earlier.

Multifamily construction spending stayed flat in July after a dip of 0.6% in June. Year-over-year, spending on multifamily construction declined 6.7%, as an elevated level of apartments under construction is being completed. Private residential improvement spending increased 1.2% in July and was 18.3% higher compared to a year ago.

The NAHB construction spending index is shown in the graph below (the base is January 2000). The index illustrates how spending on single-family construction has slowed down the pace since early 2024 under the pressure of elevated interest rates. Multifamily construction spending growth slowed down after the peak in July 2023, while improvement spending increased its pace since late 2023.

Spending on private nonresidential construction was up 4.5% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($39.7 billion), followed by the power category ($1 billion).