Home construction spending falls 5.5% in September as remodeling drops
Private residential outlays fell to an $848.8 billion annual rate, the Census Bureau said Monday. New single-family and multifamily spending held flat; home improvement spending made up the decline.
By American Policy WireFiled
The bottom line Builders kept spending on new homes steady in September, but owners pulled back sharply on renovations, the part of housing that rides most on home equity and borrowing costs.
New-home building held steady in September. Spending on fixing up existing homes did not. Private residential construction fell 5.5% to an $848.8 billion annual rate, the Census Bureau said Monday, even though new single-family and multifamily outlays were flat [1].
Why it matters: Home construction outlays shrank by more than the bureau’s margin of error, so the drop counts as statistically significant, and it left spending below its July level [1]. It came with the 30-year mortgage average still above 7%, at 7.24% in Freddie Mac’s Oct. 29 survey, against 6.17% a year earlier [4, 5].
How we got here: August looked like a recovery. The bureau first put August residential spending at $882.3 billion, a 1.1% gain, as we reported on Oct. 5 [2]. Monday’s release raised August again, to $898.0 billion, so September’s drop starts from a higher base [1, 2]. A year earlier, in September 2025, the residential rate was $931.2 billion [1]. Meanwhile the Federal Reserve held its target range at 3.75% to 4% on Oct. 28, with two officials who “preferred to raise the target range for the federal funds rate by 1/4 percentage point” [6].
By the numbers
- $848.8 billion: September private residential spending at a seasonally adjusted annual rate, down 5.5% (±1.3%) from August and 8.9% from September 2025 [1].
- $403.4 billion and $115.9 billion: New single-family and new multifamily outlays, unchanged and up 0.1% from August [1].
- 13.0%: NAHB’s figure for the monthly drop in home improvement spending, which it puts 18.0% below a year earlier [3].
- $2,186.1 billion: Total construction spending, down 1.9% (±0.7%) from August and 2.7% below September 2025 [1].
- 7.24% and 6.60%: Freddie Mac’s 30-year and 15-year averages on Oct. 29, down from 7.32% and 6.68% a week earlier [4].
Why did remodeling spending drop so much?
The release does not say, and the bureau does not break out improvements in its headline tables [1]. Subtracting the two new-construction lines from the residential total leaves the improvement category, and that is where the entire decline sits; NAHB’s count is a 13.0% monthly fall [1, 3].
NAHB notes that remodeling has trended up since 2023, helped by an aging housing stock, and describes this year as a soft patch [3]. Residential estimates are also less precise than the rest of the report. The bureau’s coefficient of variation for the monthly residential estimate is 5.0%, against 0.5% for private construction as a whole [1].
What it means for buyers and owners
- New homes are not getting scarcer in the spending data. Single-family outlays have hovered near $403 billion since July, below June’s $411.7 billion [1].
- Apartment building is steady. New multifamily spending has stayed between $115.0 billion and $115.9 billion at an annual rate every month since May [1].
- The year is still weaker than 2025. Unadjusted private residential spending for January through September was $671.3 billion, 4.5% below the same months of last year [1].
- Builders cite costs and rates. NAHB ties the single-family slowdown to weak builder sentiment, higher interest rates and rising energy and material costs [3].
- Construction starts tell a similar story. Single-family starts and permits slipped in September, as we reported on Oct. 20.
Where is construction money still growing?
Outside housing. Private nonresidential spending rose 1.1% to $790.6 billion and is 2.3% above a year earlier [1]. Private office construction gained 5.5% in the month and stands 39.5% above September 2025, and private power projects are up 12.1% over the year [1]. NAHB attributes much of the nonresidential strength to data centers, which it says rose 8.6% in September and 90.3% over the year [3]. Private manufacturing spending, by contrast, is 17.9% lower than a year ago [1].
Public construction was little changed at $546.8 billion, and public residential work rose 1.8% to $12.4 billion [1].
What’s next: The Census Bureau releases October construction spending on Dec. 1, 2026 [1].
The other side: One month is a thin basis for calling a turn. The bureau’s own notes say it may take as long as 8 months to establish an underlying trend for specific categories of construction, and that preliminary figures are subject to revision as more data come in [1]. August’s residential estimate has already moved up by $15.7 billion since its first print [1, 2].
Q&A Quick answers
- Q1How much was spent on home construction in September 2026?
- Private residential construction ran at a seasonally adjusted annual rate of $848.8 billion, down 5.5% from August and 8.9% from September 2025, according to the Census Bureau's preliminary estimate [1].
- Q2Why did residential construction spending fall in September 2026?
- Remodeling. New single-family and new multifamily spending were essentially unchanged from August, and NAHB puts the drop in home improvement spending at 13.0% for the month [1, 3].
- Q3Is new home building spending down from last year?
- Slightly. New single-family outlays were 2.4% below September 2025 and new multifamily 0.2% below, on a seasonally adjusted basis [1]. For January through September, unadjusted single-family spending was 4.8% lower than in 2025 [1].
- Q4Was August 2026 construction spending revised?
- Yes, up. Private residential spending for August now stands at $898.0 billion, compared with the $882.3 billion first reported on Oct. 1 [1, 2].
- Q5When is the October 2026 construction spending report?
- The Census Bureau has scheduled it for Dec. 1, 2026 [1].