Private Residential Construction Spending Rebounds in February

Private residential construction spending grew by 1.3% in February, following a 1.2% decline in January.

Increased spending on single-family building and home upgrades drove the majority of the growth.

The February data showed a 1.6% increase year on year, indicating modest growth in private home construction spending during market uncertainty.

The monthly increase in overall private construction spending was mostly due to increases in spending on single-family homes and residential upgrades.

Single-family building spending increased 1% for the month, continuing to rise after a five-month dip from April to August 2024.

This expansion is consistent with high single-family housing starts in February. However, single-family construction spending was 0.1% lower than a year ago.

Meanwhile, improvement spending increased by 2% in February, totaling 8.9% more than the same period last year.

In contrast, multifamily construction spending was flat in February, prolonging the declining trend that began in December 2023.

Multifamily construction spending fell 11.6% from a year ago.

The following graph depicts the NAHB construction spending index.

The indicator shows how spending on single-family construction has declined since early 2024 due to rising interest rates and concerns about building material tariffs.

Multifamily development investment has likewise declined from its high in July 2023.

Meanwhile, upgrade spending has picked up since late 2023.

Spending on private nonresidential construction increased by 2.5% from the previous year. The annual rise in private nonresidential spending was mostly driven by higher spending in the manufacturing category ($10.5 billion), followed by the electricity category ($6.4 billion).

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