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Takeaways:
- Construction spending in the U.S. rose by 12 percent on a year-over-year basis in June, and the residential sector was responsible for the uptick.
- Multifamily spending, on an annual basis, rose 23.7 percent from its revised 2014 estimate.
- Total residential spending in June increased a slight 0.4 percent from May but climbed 12 percent year over year.
Overall construction spending in the U.S. rose by 12 percent on a year-over-year basis in June, and the residential sector was responsible for the uptick.
According to the U.S. Census Bureau, total residential spending in June increased a slight 0.4 percent from May but climbed 12 percent year over year.
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Digging deeper, the National Association of Home Builders reported that multifamily spending on an annual basis rose 23.7 percent from its revised 2014 estimate. Spending on single-family construction was 12.8 percent higher than June 2014.
On a month-over-month basis, private multifamily spending increased to $52 billion, up by 2.82 percent over the revised May estimate.
In comparison, private single-family spending was $211 billion, a slight decline of 0.27 percent after two months of consecutive gains.
While some expect the pace of multifamily spending gains to gradually slow, the volume of starts looks to stay strong throughout the summer.
Following two consecutive months under 300,000, housing starts of buildings with five or more units measured at a seasonally adjusted annual rate of 389,000 in May. This figure is 31.9 percent over April 2015, according to Michael Neal, senior economist for the NAHB.
This figure is also the highest level recorded since July 2014.
For context, in February housing starts of buildings with five or more units declined on a monthly basis by 20.7 percent to 292,000. In March, rental housing starts reached 295,000.
For developers with single-family or rental product underway, overall construction costs appear to be adjusting in their favor. Over the past 12 months the price of inputs to new residential construction has dropped by 2.7 percent. Price inputs to residential maintenance and repairs have also declined, by 4.6 percent.
