The report may be from 2022, but this was a great start to 2023. Construction spending unexpectedly rose in November, according to the Census Bureau’s Monthly Construction Spending report.
- M-O-M: Total construction spending increased 0.2% to a seasonally adjusted annual rate of $1.81 trillion in November.
- Y-O-Y: Total construction spending is now up 8.5% when compared to the same time last year.
Beat The Street. Economists projected a 0.4% drop from October. However, it should be noted that October’s numbers initially looked like a beat but were revised downward into negative territory.
Bad News. Unfortunately, the report wasn’t all sunshine and roses. Private residential construction fell 0.5% for the month thanks to a big drop in single-family spending. However, spending was still up 5.3% when compared to the same time last year.
- Single-family housing fell 2.9% from October to a seasonally adjusted $394.9 billion which puts the year-over-year drop down over double-digits at 10.2%.
- Multi-family was almost the exact opposite with spending rising 2.4% from October and year-over-year spending was up 10.7% to a seasonally adjusted annual rate of $110.2 billion.
BOTTOM LINE: As high prices and rates push single-family homes out of reach for more Americans multi-family becomes the only option. Builders and investors know this and are reallocating capital appropriately.