Residential Feast Offset by Nonresidential Famine
- Total construction spending was flat during August. Overall spending is up 7.0% on a year-to-date basis.
- Residential outlays rose 0.4%, the sixth consecutive monthly gain. The gain in the residential sector was owed almost entirely to a 2.5% rise in home improvement spending. More time being spent at home, low interest rates and rising home equity has led to a surge in repair and remodel activity.
- Single family and multifamily spending both declined during the month, possibly due to shortages of key raw materials. Low inventories of homes for sale and still-strong buyer demand continue bolster residential construction spending, however, which is up 25.8% year-to-date.
- Total nonresidential expenditures slipped 0.4% in August. Most major categories of nonresidential spending fell during the month, notably healthcare, lodging, power and commercial outlays.
- Building material scarcities and uncertain tenant demand, which are both knock-on effects of the pandemic, continue to weigh on nonresidential activity. Nonresidential spending is down 6.7% year-to-date as of August.
- There is some hope on the horizon for the nonresidential sector. The Architectural Billings Index, which leads nonresidential construction spending by about a year, rose to 55.6 during August.
- Public outlays rose 0.5% during the month, as education and highway & street spending registered solid gains.