Construction spending witnessed a notable 0.4 percent increase from September to October. This upward trend was primarily driven by a surge in single- and multifamily residential construction. However, it was accompanied by declines in public projects and mixed results in private nonresidential categories. An Associated General Contractors of America (AGC) analysis of government data shed light on these fluctuations.

Unraveling the Dynamics of Construction Spending

Private Residential Construction: A Growing Sector

In October, private residential spending saw a significant 1.5 percent increase. This growth was further emphasized by a 6.4 percent year-over-year rise. Single-family homebuilding also showed positive momentum, with increments of 0.8 percent and 1.3 percent respectively. Multifamily construction, although experiencing a 0.2 percent increase in October, witnessed a 6.8 percent decline compared to the previous year. Homeowners' spending on additions and renovations was particularly robust, jumping 2.7 percent in the month and an impressive 18.5 percent from October 2023.

Public Construction: A Tale of Contrasts

Public construction spending faced a 0.5 percent decline in October but managed to post a 4.5 percent increase over 12 months. Among the top three segments, highway and street construction slipped 0.7 percent and 1.2 percent year over year. Education construction dipped 0.4 percent in the month but rose 0.6 percent compared to October 2023. Transportation spending fell 0.1 percent in October but saw a 5.4 percent increase over the last 12 months.

Private Nonresidential Construction: A Mixed Bag

Private nonresidential spending slipped 0.3 percent in October but achieved a 3.5 percent year-over-year gain. Within the three largest segments, manufacturing construction remained unchanged from September but showed a 16.3 percent increase compared to October 2023. Power construction rose 0.2 percent in the month and 5.3 percent year over year. However, commercial construction (including warehouse, retail and farm) experienced a 1.1 percent decline in the month and a 11.2 percent decrease compared to last year.

Looking Ahead: Accelerating the Construction Process

Association officials are urging the incoming Trump administration and Congress to take proactive measures. They advocate for exploring ways to expedite federal permitting reviews for infrastructure and construction projects. Additionally, they call for giving federal agencies greater flexibility in complying with new Buy America rules. For instance, agencies should be able to provide waivers when domestic materials are unavailable. Jeffrey Shoaf, AGC's CEO, emphasizes that there is no reason the federal government cannot hold projects to high standards while completing required reviews in months instead of years. Cutting federal review times and providing more flexibility will undoubtedly help get more construction projects up and running.