Private residential construction spending decreased by 0.5% in November and spending on single-family construction fell 2.9%, according to analysis of government data by the NAHB. Overall private residential construction spending fell for the sixth consecutive month, largely due to the lower spending on single-family construction, which has also decreased for six straight months.
Compared to a year ago, single-family construction is 10.2% lower. A surge for interest rates cooled the housing market in 2022. The average 30-year Freddie Mac fixed mortgage rate reached 7% in October for the first time in 20 years.
Multifamily construction spending increased by 2.4% in November, after an increase of 2.4% in October. This was 10.7% over the November 2021 estimates, largely due to the strong demand for rental apartments. Private residential improvements rose by 1.3% in November and was 27.6% higher over a year ago. The remodeling market continues to overperform the rest of the residential construction sector.
The NAHB construction spending index illustrates how construction spending on single-family has slowed since early 2022 under the pressure of supply-chain issues and elevated interest rates. Multifamily construction spending has had a solid growth in recent months, while improvement spending has increased its pace since early 2019. Before the COVID-19 crisis hit the U.S. economy, single-family and multifamily construction spending experienced solid growth from the second half of 2019 to February 2020, followed by a quick post-COVID rebound since July 2020.
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