How Much Are We Spending on New Construction?

The National Association of Home Builders (NAHB) released its May report on Private Residential Spending recently, which shows a decrease in residential construction spending by 0.6 percent. It is the first decline since June of 2014.

According to the report, this coincides with a decline of housing starts, which has experienced three consecutive months of decrease. This month alone, starts are down 5.5 percent, according to a different report by the NAHB. Single-family permits have also been down in May—4.9 percent. A decline in multifamily construction is also attributed to the slowdown, which fell 3.3 percent. In April, that number fell 0.2 percent.

With that being said, year-over-year, residential construction spending is still 11.2 percent higher. As is multifamily construction, which is 3.0 percent higher. Single-family spending is 7.9 percent higher than it was a year ago, and home improvement spending is 3.0 percent higher than it was a year ago.

Since 2011, single-family and multifamily spending has been on the rise, although multifamily spending has increased at a much more rapid pace than single family spending. Spending on home improvements has also seen a static increase, with a spike starting in 2016.

Private nonresidential construction spending was also down in 0.7 percent from April, but it remains 0.8 percent higher than it was a year ago.

Overall, the month-over-month decline doesn’t overshadow year-over-year declines in any of the categories measured by the NAHB’s report. According the U.S. Census Bureau, residential spending on a seasonally adjusted annual rate is $509,619 million, and $44,284 million on a nonseasonally adjusted rate.