Home construction spending rises for first time in months

Residential construction spending saw its first monthly increase in six months this summer, as builders navigated their way through housing market and tariff-related challenges.  

While construction spending rose month over month in June, it still came in well under levels of a year ago, the National Association of Home Builders said in its analysis of U.S. Census Bureau data. Total dollar amount fell 5.3% compared to June 2024, decreasing “as the housing sector continues to navigate the economic uncertainty stemming from ongoing tariff concerns and elevated mortgage rates,” wrote NAHB principal economist Na Zhao.

Compared to May’s numbers, overall spending edged up 0.1%. Single-family residential and remodeling growth drove the increase with both seeing the same 0.1% rise. Offsetting improvement in those categories was a pullback of 0.4% in multifamily spending amounts, continuing a trend that first started two years ago. 

On a year-over-year basis, construction spending fell across all three categories. Single-family construction came in 2.1% lower, home remodeling took a 7.6% dip and multifamily fell by a steeper 9.4%. 

The pressure of interest rates this year has weighed on builders, with single-family construction spending trending slower since early 2024, NAHB said. Likewise, multifamily amounts began heading downward beginning in July 2023, while signs of weakening in home improvement spending only became evident earlier this year. 

Compounding interest rate challenges in 2025 has been ongoing uncertainty over U.S. tariff policy, which led NAHB’s homebuilder sentiment index to nosedive over the summer. Builders reported higher material costs, due in part to steel and aluminum tariffs introduced earlier this year.    

Anticipated increases in construction costs coming from tariff policy has some of the largest publicly traded homebuilders already factoring in price increases for new units in the second half of 2025. 

Recent executive orders by President Trump affecting Canadian wood imports will also likely push material costs upward, housing officials forecasted.

Mid- and late-summer reports, though, pointed to potentially more favorable news ahead, with housing starts seeing the largest jump in five months in July, primarily thanks to multifamily activity. 

On the other hand, new business forecasts still paint an overall bleak view of the housing market for the short term. Fannie Mae recently lowered its home sales expectations for this year, leaving them largely flat compared to 2024 activity. The downgraded forecast comes as the government-sponsored enterprise also revised its mortgage rate predictions higher.