Construction Spending Holding Steady

(Image courtesy of U.S. Census Bureau and Wells Fargo Economics)

November’s construction spending was virtually unchanged from the month before at a seasonally adjusted annual rate of $2,152.6 billion, the U.S. Census Bureau reported.

The revised October estimate equaled $2,152.3 billion, Census reported. The November figure is 3.0% above the November 2023 estimate of $2,090.7 billion.

“Total construction spending was essentially unchanged in November as a modest gain in residential outlays helped offset a small decline in nonresidential spending,” Wells Fargo Economists Charlie Dougherty, Jackie Benson and Ali Hajibeigi wrote in an analysis. “The residential rise was driven by growth in single-family and home improvement outlays, reflecting home builders’ ability to offer incentives to shore up demand and low supply in the existing home market. Although data center, power and highway & street outperformed, most other nonresidential segments weakened during the month. All told, total construction spending continues to moderate as elevated interest rates and tight credit conditions weigh on activity.”

Looking closer at multifamily housing, Wells Fargo said the overall pace of multifamily construction remains tepid. “Private multifamily construction outlays slipped 1.3% in November, marking the fifteenth decline over the past 17 months. A downtrend in new multifamily construction projects is likely to keep construction spending muted for some time.”

Multifamily starts descended 27% year-to-date through November 2024, accompanied by a 19% year-to-date pullback in permits, Wells Fargo noted.