By Nathalie Voit
The Commerce Department said monthly construction spending plunged for the first time since the fall, according to an economic news release posted on July 1.
Total construction spending fell 0.1% in May after surging by 0.8% in April. This was the first decrease since September, and well below the Reuters +0.4% projected estimate.
Data from the Commerce Department showed total construction spending up 9.7% year-over-year in May as residential spending soared 18.7% over the past 12 months.
Non-residential spending rose by just 0.1% over the year, driven by steep declines in the Lodging (-11.7%), Public Safety (-10.1%), and Communication (-6.9%) categories. Spending to build manufacturing facilities soared 26.3% annually, while spending to construct non-residential conservation and development buildings accelerated by 11.3% in May.
Private sector construction remained stagnant after rising 1.1% in April. Residential construction rose 0.2% over the month to reach a seasonally annualized rate of $938.2 billion, while spending on non-residential construction fell 0.4% to settle at $497.8 billion for the month.
Surprisingly, spending on new single-family housing and multi-family dwellings did not budge in May.
According to a press release from the National Association of Home Builders (NAHB), the single-family housing market has been at the center of a months-long real estate boom that took off earlier this year. However, surging interest rates and ongoing supply-chain challenges have brought the pace of residential construction to a halt as housing starts edged lower in May and builder confidence weakened.
Year-over-year, investments in private residential projects surged by 19.0%. Investments in new single-family housing advanced 15.1%, reaching an annual rate of $483.1 billion. Investments for new multi-family housing units dropped 3.6% to $100.3 billion in May.
Spending on private non-residential projects climbed 3.7% from May 2021, driven by construction for educational (18.0%) and commercial buildings (10.9%).
According to seasonally adjusted annual data, total private construction surged by an annualized rate of 13.2% in May.
May also saw public construction spending slip by 0.8% over the month.
Spending on educational construction projects fell 0.4% to $78.4 billion, while spending on highway construction slipped 2.3% to $98.1 billion.
The Commerce Department said total public construction spending sank by 2.7% year-over-year.
