April's Construction Spending Report

Spending on new homes rose by 18.2 percent from the previous year, but rising costs and interest rates could slow down the pace of construction.

By Nate Griffin – Tuesday, June 7th, 2022

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The Census Bureau released April's Value of Construction Put in Place Survey which estimate the total value of construction spending in the US.

About half of all construction spending was for housing, followed by private non-residential buildings. State and federal spending accounted for 20.1 percent of all construction, the largest components of which were road construction, transportation and education.

Total construction spending was up 0.2 percent from March 2022 and up 12.3 percent from April of the previous year.

The largest yearly increases in spending were in Manufacturing (+34.1%), Conservation (+27%), Residential (+18.2%) and Commercial (+18.1%).

The largest yearly declines were in Lodging (-21.5%), Religious (-14.7%) and Public Safety (-10.2%).

But these numbers are not adjusted for inflation. After taking into account the over 8 percent rise in prices throughout the nation this year, the total increase in construction spending was only 3.8 percent above the April 2021 numbers.

Residential construction spending continued to grow at about the same pace as before the pandemic. But spending on other private buildings fell as hotels, restaurants and other service related businesses pulled back investments. In June of 2021 residential spending surpassed commercial spending for the first time since October of 2006.

Despite the increase in spending on housing, new home starts are still lower than in 2003, meaning that the costs for constructing new homes has risen significantly.

The construction industry is a major part of the economy, making up approximately 7 percent of GDP. Rising costs in materials and labor, along with rising interest rates and home prices, could slow construction spending and the pace of new home construction.