Homebuilding continued to boom in November, new data show, while concern is growing over the lack of nonresidential projects.
Construction spending overall grew to an estimated $1.46 trillion in November, seasonally adjusted, up 0.9 percent from October, according to the Census Bureau’s monthly report.
Private residential projects, including home renovations, accounted for 45 percent of the total with an estimated $658 billion put toward private homebuilding, up 2.7 percent from the revised October figure. It was the sixth consecutive month in which housing dominated construction spending.
The total spent on construction last year through November was up 4.4 percent to $1.3 trillion, from $1.26 trillion during the same 11 months in 2019.
Within the residential sector, including private and public projects, construction spending in November was up 16 percent year-over-year.
The sectors that saw spending fall the most included lodging, down 26.5 percent; and manufacturing and amusement and recreation projects, both down nearly 15 percent.
The biggest annual percentage increase was in public safety projects with more than $15 billion during November, compared to about $12 billion a year earlier.
November marked the fifth straight month that private nonresidential construction spending dropped, and the fifth time in six months that public nonresidential spending fell.
The decline in non-residential projects is worrying the Associated General Contractors of America, which forecasted that the volume of projects for contractors to bid on in 2021 will be “even more meager.” The trade group is advocating for Congress to increase investment in infrastructure projects to help make up for the shortfall.
“Without additional measures to boost demand for nonresidential construction, this year is likely to be a challenging one for the industry,” said Stephen E. Sandherr, CEO of the organization, in a release.
The housing market’s record year in 2020 was driven by a surge in demand from wealthier buyers able to work from anywhere searching for more space, and less well-heeled buyers taking advantage of historically low interest rates. Rising prices triggered by the strong demand and limited supply have shut many of the latter out of the market, and sales numbers have begun to slow.
But despite indicators of a potential slowdown, economists forecast that the housing market will continue to soar into 2021 given the historic low level of supply, which is keeping homebuilders happy.
November’s residential construction spending was dominated by new single-family homes, up 18 percent year-over-year, seasonally adjusted. In November, single-family housing starts reached levels not seen since 2007. Spending on new multifamily projects during the month was also up nearly 16 percent.