Residential Construction Spending Trends Upward in February

NAHB analysis of Census Construction Spending data shows that total private residential construction spending rose 1.1% in February after an increase of 1.1% in January. Spending stood at a seasonally adjusted annual rate of $850.6 billion. Total private residential construction spending was 16.6% higher than a year ago.

These monthly gains are attributed to the strong growth of spending on single-family and multifamily construction, while spending on improvement slipped. Single-family construction spending increased to a $465.4 billion annual pace in February 2022, up by 2.5% over the upwardly revised January estimates. Multifamily construction spending inched up 0.1%, and it was 7.8% higher than a year ago. Spending on improvements decreased 0.7% in February, after an increase of 0.9%  in January. Home building is still facing supply chain issues, which means the industry is dealing with rising material costs as well as ongoing 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 rebound since July 2020. New multifamily construction spending has picked up the pace after a slowdown in the second half of 2019.

Private nonresidential construction spending edged up to a seasonally adjusted annual rate of $503 billion in February, a 0.2% increase from the January estimates. And it was 6.2% higher than a year ago. The largest contribution to this month-over-month nonresidential spending increase was made by the class of power ($1.5 billion), followed by class of manufacturing ($0.5 billion), and class of transportation ($0.4 billion).