Residential construction spending edges up in August as rates climb
Private home building ran at an $882.3 billion annual rate, up 1.1% from July by the Census Bureau's estimate, and July was revised sharply higher. The 30-year mortgage average jumped to 7.28% the same day.
By American Policy WireFiled
The bottom line Spending on homes held up through August, but builders and remodelers now face a 30-year mortgage rate near 7.3%, which raises the cost for the buyers they depend on.
Spending on private home construction rose 1.1% in August to an $882.3 billion annual rate, the Census Bureau said Thursday, and the bureau revised July’s figure up by more than $13 billion [1, 2]. The same day, Freddie Mac’s 30-year fixed average jumped a quarter point to 7.28% [4, 5].
Why it matters: Construction outlays show how much builders and owners are actually putting into houses, and the August report suggests the summer slowdown was milder than first thought [1, 2]. The rate picture moved the other way. The 30-year average was 6.34% a year earlier, and the Fed raised its target range to 3.75% to 4% on Sept. 16 [6, 7].
How we got here: Residential outlays have drifted lower for most of the year. The bureau’s revised series puts April at $882.1 billion, June at $882.1 billion and July at $872.7 billion, so August only returned spending to its spring level [1]. A year earlier, in August 2025, the rate was $926.9 billion [1]. The Fed’s September statement said, “Inflation remains elevated,” and that the quarter-point increase would support “a timelier return” to its 2% goal [7].
By the numbers
- $882.3 billion: August private residential spending at a seasonally adjusted annual rate, up 1.1% from July and down 4.8% from August 2025 [1].
- $403.3 billion and $115.8 billion: New single-family and new multifamily outlays, each up 0.2% for the month; single-family is 3.5% below a year earlier [1].
- 2.5%: NAHB’s figure for the monthly rise in home improvement spending, the biggest residential gain, though improvements were down 7.4% over the year [3].
- $2,203.1 billion: Total construction spending, up 0.9% from July and 1.7% below August 2025 [1].
- 7.28% and 6.60%: Freddie Mac’s 30-year and 15-year averages on Oct. 1, up from 7.03% and 6.42% a week earlier [4, 5].
How much did the July revision change?
A lot. On Sept. 1 the bureau put July private residential spending at $859.0 billion, a 1.3% drop from June [2]. It now lists July at $872.7 billion [1]. New single-family spending for July went to $402.7 billion from the $395.2 billion first published, which had shown a 3.2% monthly slide [1, 2].
Total July spending was raised to $2,184.5 billion from $2,157.6 billion [1, 2]. The single-family line still sits below its June level of $411.7 billion, now revised [1]. That fits the construction counts: single-family starts rebounded in August after a weak July, as we reported on Sept. 17.
What it means for buyers and owners
- Year-to-date building is lower. Unadjusted residential spending for January through August was $602.2 billion, 4.1% below the same stretch of 2025; new single-family was down 5.3% [1].
- Remodeling held the month up. NAHB says improvement outlays have trended higher since 2023 on an aging housing stock, while describing 2026 as a soft patch [3].
- Financing costs rose after the data. The 15-year average gained 18 basis points in a week, to 6.60% [4, 5].
- Builders’ read is cautious. NAHB ties weaker single-family spending to builder sentiment, rising rates and costs [3].
Where else is construction money going?
Not into homes. Private nonresidential spending rose 1.0% in August to $773.0 billion, a gain the bureau counts as significant [1]. Private office construction climbed 4.6% and is 29.8% above a year earlier; NAHB points to data center building as a driver of nonresidential gains [1, 3]. Private power projects are up 9.7% over the year, while private manufacturing spending is 19.8% lower [1].
Public construction was nearly flat at $547.8 billion, and public residential work, such as government-built housing, was $12.3 billion, 5.9% below August 2025 [1]. For the year through August, all construction totaled $1,450.4 billion, 3.1% below the same months of 2025 [1].
What’s next: The Census Bureau releases September construction spending on Nov. 2, 2026 [1]. Freddie Mac publishes its weekly rate survey each Thursday [4].
The other side: The headline gain may not be real. The bureau’s 90% confidence interval on the residential increase runs from a 0.2% decline to a 2.4% rise, and the error band on the total is plus or minus 1.0% [1]. Private construction overall, residential and nonresidential together, did rise by a margin the bureau calls significant: 1.1%, plus or minus 0.5% [1].
Q&A Quick answers
- Q1How much was spent on home construction in August 2026?
- Private residential construction ran at a seasonally adjusted annual rate of $882.3 billion, up 1.1% from July, by the Census Bureau's preliminary estimate [1]. The bureau says that monthly change is not statistically significant [1].
- Q2Is home building spending down from last year?
- Yes. Private residential spending was 4.8% below August 2025, with new single-family down 3.5% and new multifamily down 0.6% [1]. Through August, residential outlays were 4.1% below the same months of 2025 [1].
- Q3Did remodeling spending rise in August 2026?
- By NAHB's count, improvement spending rose 2.5% from July, the largest gain among the residential categories, but was 7.4% lower than a year earlier [3].
- Q4How much was July 2026 construction spending revised?
- Total spending for July now stands at a $2,184.5 billion annual rate, up from the $2,157.6 billion first reported on Sept. 1 [1, 2]. Private residential July spending moved to $872.7 billion from $859.0 billion [1, 2].
- Q5When is the next construction spending report?
- The Census Bureau has scheduled the September 2026 report for Nov. 2, 2026 [1].