Homebuilding was strong in December and finished the year up 11.8 percent, while all other construction combined was flat in 2020 — and down 3 percent in the private sector, new Census Bureau figures show.
Construction spending overall last year exceeded $1.4 trillion, up 4.7 percent from the year before, according to the bureau’s latest construction report.
Powered by homebuilding, spending also continued to climb month-over-month. Construction edged up in December at a seasonally adjusted annual estimated rate of $1.49 trillion, up 1 percent from the November revised estimate of $1.47 trillion.
The monthly increase was three times greater for residential construction: The seasonally adjusted annual rate in December was 3.1 percent above the revised November estimate.
Residential construction represented almost half of December’s estimated spending. The annual rate of housing-related construction spending in December was up nearly 21 percent year-over-year.
Private construction of single-family homes made up the biggest slice of the month’s spending at an estimated $365 billion, up 23.5 percent from December 2019. Private spending on multifamily construction was estimated at $91 billion, a year-over-year increase of 18 percent.
The continued increases in spending on home construction comes as the inventory of existing homes for sale reaches a historic low, again, with just over 1 million units on the market. At the pace of sales in December, those homes would be sold in less than two months.
Homebuyer demand shows signs of wavering, which many economists attribute to rising prices. The median home price at the end of 2020 for existing homes was $309,800, up nearly 13 percent from a year earlier.
The Case-Shiller index tracking home prices surged in November, surpassing its previous peak of July 2006. And last week the Mortgage Bankers Association’s weekly survey found that the average size of a home mortgage was nearing $400,000.
Within non-residential construction, the sectors that saw the biggest declines in spending included lodging, down 24 percent in December from the previous December and 14 percent for the year; manufacturing, down 18 percent for the month and 10 percent for the year; and amusement/recreation, off 16 percent and 7 percent.
Spending on public safety — a tiny category — was the only sector that saw a bigger annual percentage increase than residential, with a 42 percent gain to $15 billion.