The North American Association of Home Builders’ analysis of total private residential construction spending Census data finds that all three components increased in October. Single-family spending increased 1.8 per cent, multifamily spending increased 1 per cent, and home improvement spending increased 0.6 per cent from revised September estimates.
Total private residential construction spending (all three components combined) increased from the revised September estimate to a seasonally adjusted annual rate of US$353.8 billion. On a 3-month moving average basis, from October 2013, the annualized pace of total private residential construction spending increased 1.3 per cent.
The growth in annualized private residential construction spending matches market sentiment, which has been solidly positive. The November NAHB/Wells Fargo Housing Market Index, for example, rose four points to a level of 58 for the 5th consecutive month above 50. Additionally, NAHB’s Multifamily Production Index (MPI) has had 11 consecutive quarters above 50.
The home improvement spending component of residential construction spending has experienced weakness in 2014 due to year-over-year declines in the rate of existing home sales and the expiration of an energy-efficient retrofit tax credit. However, recent gains in existing home sales and rising remodeler confidence point to growth in 2015. The Remodeling Market Index (RMI) rose one point to 57 in the third quarter of 2014, the sixth consecutive 3-month period the index has been over 50.
Total (private and public) nonresidential construction also increased in October. The annualized pace of spending on commercial, transportation, power, education and other nonresidential projects was up 1 per cent from September and 4.3 per cent from October of 2013.