Private residential construction spending rises

Private residential construction spending increased by 1.5% in October, according to the latest U.S. Census Construction Spending data. Year-over-year, the October report showed a 6.4% increase.

The monthly increase in total private construction spending was primarily driven by higher spending on residential improvements. Improvement spending surged by 2.7% in October and was 18.5% higher compared to the same period last year.

Spending on single-family construction inched up by 0.8% for the month. This marks a continuation of growth after a five-month decline from April to August, aligning with the rising builder confidence. Compared to a year ago, spending on single-family construction was 1.3% higher.

Meanwhile, multifamily construction spending ended its streak of ten consecutive monthly declines, edging up by 0.2% in October. Despite this slightly monthly gain, multifamily construction spending remained 6.8% lower compared to a year ago.

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

Spending on private nonresidential construction was up 3.5% over a year ago. The annual private nonresidential spending increase was mainly due to higher spending for the class of manufacturing ($32.9 billion), followed by the power category ($6.4 billion).