A deeper dive into the latest U.S. Census Bureau’s Construction Spending report for March, with additional analysis provided by the National Association of Home Builders, reveals that total private residential construction spending rose 1% in March after an increase of 0.7% in February. Spending stood at a seasonally adjusted annual rate of $882 billion. Total private residential construction spending was 18.4% higher than a year ago.
The NAHB analysis indicates that these monthly gains are attributed to the strong growth of spending on single-family and improvements, while spending on multifamily construction slipped. Single-family construction spending increased to a $472.6 billion annual pace in March 2022, up by 1.3% over the upwardly revised February estimates. Spending on improvements rose 1.1% in March after a dip in February. Multifamily construction spending slipped 0.5%, but it was 3.9% higher than a year ago.
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’s Construction Spending Index—which has its base as January 2020—shows 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 also picked up the pace after a slowdown in the second half of 2019.
The report indicates that private nonresidential construction spending decreased to a seasonally adjusted annual rate of $497.6 billion in March, a -1.2% decrease from the February estimates, but was 8.5% higher than a year ago. The largest contribution to this year-over-year nonresidential spending increase was made by the class of manufacturing ($22.7 billion), followed by commercial (12.7 billion), and office ($3.4 billion).
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March Gains in Private Residential Construction Spending