Residential and Nonresidential Outlays Pull Back
Source: ITR Economics – September 19, 2024
Summary
Brighter Days Ahead
High interest rates, a tight credit environment and elevated operational costs continue to weigh on construction. Total construction spending fell 0.1% during August, the third straight monthly decline. Drops in the private residential and nonresidential categories drove the overall monthly pullback in outlays, while public expenditures rose modestly. Although it may take time for construction to benefit from less restrictive monetary policy, lower interest rates should eventually bring a turnaround in activity.
Residential Construction Remains Challenged
- The pace of residential construction appears to be moderating under the weight of restrictive monetary policy. Although overall residential outlays elevated far above their pre-pandemic levels, the 0.3% dip in August marked the third sequential decline.
- August’s slip in residential spending was felt entirely in the private sector, which makes up more than 98% of overall residential construction. Both single-family and multifamily building waned over the month.