Residential construction spending may be up in 2015, but some areas performing better than others

Residential construction spending was at a seasonally adjusted annual rate of $359.5 billion in May, according to the latest data from the U.S. Census Bureau.

Although that represented a paltry 0.3 percent increase from April, residential construction is up 7.8 percent from May 2014, and 4.8 percent year-to-date.

Single-Family/Multifamily Residential Construction

Chicago Agent has noted multifamily housing’s recent dominance at the permit and start stages of the construction process, and closer inspection of the Census Bureau’s historical data shows that construction spending has also tilted towards multifamily housing in a major way:

• Single-family construction spending was flat from April to May, but it rose 11.2 percent year-to-year (which is more than 3 percentage points ahead of the general residential construction market).
• That increase, though, paled in comparison to multifamily construction, where spending rose 20.8 percent year-over-year.
• Since bottoming in August 2010, multifamily construction spending has risen 273 percent.

Single-Family Still Dominates – For Now

Despite those exponential increases, multifamily still makes up a small share of overall construction spending. In fact, as of May, multifamily spending accounted for just 13.6 percent of all construction activity, compared to 58.2 percent for single family.

Still, in May 2010, multifamily’s market share was just 5.8 percent of spending, so its market share has grown considerably – and given the rate at which multifamily permits have grown, it’s likely multifamily spending will continue to increase.