NAHB analysis of Census Construction Spending data shows that total private residential construction spending increased 1.4% to a seasonally adjusted annual rate (SAAR) of $540.7 billion in December 2019. With the support of decreasing mortgage interest rates, it was the sixth consecutive monthly increase after declines in the first half of 2019. Nevertheless, the value of total private residential construction was $514.3 billion in 2019, 4.7% lower than a year ago.
Private nonresidential spending fell 1.8% on a monthly basis and is down by 0.1% compared to December 2018, according to Associated Builders and Contractors. Public nonresidential construction spending also slipped in December, falling 0.4% for the month. On a year-over-year basis, public nonresidential spending is up 11.2%.
The monthly increase is largely due to the solid growth of spending on single-family construction and remodeling. Single-family spending was at an annual pace of $289.3 billion, up 2.7% in December, and was 5.2% higher compared to a year ago. Private residential improvements, which include spending on remodeling, major replacements, and additions to owner-occupied housing units, edged up 0.5% to a $193.7 billion (SAAR) in December. Multifamily construction spending slipped down 1.8% in December, following a dip of 0.1% in November.
Single-family starts are predicted to continue on a gradual, upward trajectory in 2020, fueled by solid job growth and low mortgage rates that will keep demand firm.
Read more at NAHB’s Eye on Housing Blog.