According to the National Association of Home Builders’ (NAHB) recent analysis of Census Construction Spending data, total residential construction spending continued to rise this past August to a seasonally adjusted annual rate of $390 billion.
Private single-family spending rose 14 percent higher on a year-over-year basis, while multifamily construction spending rebounded in the same month, up 25 percent year-over-year. The NAHB-constructed spending index indicates that recent gains have been driven by the steady increase in multifamily construction. But the pace of multifamily spending is gradually slowing, and the NAHB anticipates accelerating growth for single-family spending.
Nonresidential construction spending increased by 12.3 percent, the largest contribution to this year-over-year gain generated by manufacturing-related construction (58% increase), followed by lodging (32% increase), and amusement/recreation (30% increase).
More good news surfaced as the NAHB also peered at the Consumer Confidence Index’s September findings, which are again inching toward pre-recession highs. The Index rose to 103.0 in September, up from 101.3 in August, compared to the pre-recession peak of 115.8 in July 2007. Outside of the increase in confidence, the share of respondents planning to buy a home in the next four months also increased, from 4.4% in August to 6.3% in September.
Interest rates are likely to rise going forward, but evidence suggests this will not have a large negative impact on home buying. Instead the steady rise in consumer confidence, from the recession lows back to near its pre-recession peak, will have a more substantial and positive impact on home buying.