Steady Construction Spending With Declining Residential Category

Mortgage News April 17, 2023

In February, there was a marginal decrease (-0.1%) in construction expenditure compared to January, and although there was a 5.2% increase compared to the previous year, the growth was not significant. Of particular importance is that residential construction is no longer a leading contributor to the industry’s figures and is struggling to maintain its position.

The total expenditure on construction in February, after being adjusted for seasonal variations, was $1.844 trillion, slightly lower than the previous month’s $1.845 trillion but higher than February 2022’s $1.753 trillion. The unadjusted spending for the month was $130.004 billion. So far this year, the total spending on construction is $260.8 billion, representing a 5.9% increase over the same period in 2022.

The expenditure on construction projects funded by private sources in February remained stable at $1.453 trillion, which is similar to January’s spending, but there was a 3.3% increase compared to the previous year. Unadjusted spending for the month totaled $104.765 billion, which is slightly lower than the previous month. However, the year-to-date (YTD) spending on privately funded construction projects, which amounted to $204.774 billion, is 4.3% higher than the same period last year.

From January to February, the expenditure on privately funded residential construction projects decreased by 0.6%, and the adjusted rate of $852.130 billion is 5.7% lower than that of February 2022. Specifically, the spending on new single-family construction was $368.359 billion, which is 1.8% lower than the previous month and 21.4% lower than in February of the previous year.

The expenditure on residential construction projects amounted to $58.449 billion, which is the same as January’s spending. The spending on both single-family houses ($25.217 billion) and multifamily units ($9.722 billion) remained unchanged from the previous month as well.

The publicly funded construction spending, overall, performed slightly better than the private sector in February. Although most categories of spending declined during the month, the total spending increased by 12.8% from February 2022, reaching $390.953 billion. The majority of the significant percentage gains were observed in public infrastructure projects such as power, highways, water, and sewage. However, residential spending also increased by over 13% compared to the previous year.

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