Construction Spending Shows Unexpected Increase in August
The Census Bureau revealed on Monday that construction spending rose in August.
In annualized terms, construction spending hit $2.17 trillion, reflecting a 0.2% increase from July’s revised total of $2.165 trillion. This surprising uptick defied forecasts that anticipated a 0.2% decline. The release of this report, which was delayed due to the recent government shutdown, highlights the ongoing strength of the construction sector, which had been projected to slow down.
Leading the charge was private construction spending, which grew by 0.3% to reach $1.652 trillion. Residential construction was particularly robust, rising by 0.8% to $914.8 billion over the year. This growth was mainly driven by multifamily projects and home renovations, even as spending on single-family homes dropped by 0.4%. The uptick in multifamily housing suggests that the declining trend observed since mid-2023 might be reversing. Overall, indicators related to housing imply that builders are actively increasing supply, which may signal a shift toward more affordable options as new inventory becomes available.
According to Na Zhao, chief economist at the National Association of Home Builders, “Private housing construction spending rose 0.8% in August, continuing a trend of steady growth that began in June 2025. This modest rise primarily came from increased expenditure on multifamily projects and home improvements. Nevertheless, total spending remains 2% lower than a year ago, as the housing market grapples with ongoing economic uncertainties linked to tariffs and rising mortgage rates.”
On the other hand, nonresidential construction experienced a slight decline of 0.3% to $737.3 billion, while public construction spending stayed relatively stable at an annual rate of $517 billion. Notably, educational construction gained 0.6%, but highway construction saw a decrease of 0.2%.
Year-over-year, total construction spending still shows a decline of 1.6% compared to August 2024. However, the positive momentum month-over-month suggests that the sector might be finding its footing after previous challenges.
This report marks one of the earliest updates from federal agencies as they address a backlog resulting from the six-week government shutdown. The Census Bureau has yet to indicate when it will publish the construction spending data for September.
