Residential Construction Spending Up in August

Total private residential construction spending rose 0.4% in August compared with July to a seasonally adjusted annual rate of $786.6 billion while that activity was 24.3% higher than a year ago, according to an analysis of U.S. Census Construction Spending data by the National Association of Home Builders.

The monthly gains are attributed to the strong growth of spending on improvements, while spending on single-family and multifamily constructions slipped. Spending on improvements rose 2.5% in August, after a 0.2% dip in July. Single-family construction spending decreased to a $413.4 billion annual pace in August, down by 0.7% over the downward revised July estimates. Multifamily construction spending dipped 0.8% in August. Homebuilding is still facing the supply chain issues, the rising material costs and labor shortages.

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, and the quick rebounds since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019.

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