Posting a second consecutive month of growth, the annual pace of single-family construction spending increased in April to its highest level year to date, according to estimates released by the U.S. Census Bureau on Monday.
Rising about 1.4% from March but remaining 2.9% below year-ago levels, private single-family investments exceeded an annual pace of $416 million last month, offsetting a 0.3% decline in private multifamily spending, the government reported. Private multifamily spending was still 1.1% higher than a year ago.
Single-family investments had been 4.2% lower year over year in March, the first full month of the ongoing Iran war. Overall private residential construction spending hit an annual pace of nearly $910 million, up 0.8% monthly and 1.7% yearly, but below January’s pace of about $915 million.
Total residential construction, which includes private and public dollars, topped an annualized pace of $922 million in April, also up 0.8% from March and 1.7% from a year ago.
As the Iran war and tariffs put the double-squeeze on home builders — raising financing and material costs while eroding affordability for typical homebuyers — economists largely expect single-family construction to lag year-before levels for the second straight year.
Even as private single-family construction spending rose on a monthly basis in April, single-family starts plunged 9% from March levels to land 2.4% lower year over year. Permit applications that serve as a forward-looking indicator of single-family starts activity in the months ahead fell 2.6% in April following a 3.8% drop in March.
Compounding affordability pressures that have eroded homebuyer purchasing power and broader enthusiasm have ultimately undercut the pace of sales for newly constructed homes this spring, even though new monthly mortgage payments for new homes sold in April declined slightly while remaining above prewar levels.
New-home sales plunged 6.2% from March to April to land 11% lower than a year ago, according to previous reporting from the Census Bureau.
Underlying that decline in sales, new-home mortgage demand slumped 10% on a monthly basis in April, notching a 2.4% yearly decline — the first annual slide since October, said the Mortgage Bankers Association in mid-May.
