U.S. construction spending weakened in July 2026, reaching its lowest level in nearly three years as elevated mortgage rates and excess single-family housing inventory continued to pressure residential development.
According to the latest Census Bureau data, total construction spending fell 0.5% to $2.158 trillion, marking the lowest level since October 2023. Spending was also down 3.8% year over year.
Single-Family Construction Bears the Pressure
Residential construction spending declined 1.3% in July, led by a sharp 3.2% drop in single-family construction. On a year-over-year basis, single-family spending fell 6.5%.
Higher borrowing costs remain a significant challenge for builders and buyers. The average 30-year fixed mortgage rate was around 6.66%, while a growing supply of unsold single-family homes added further pressure to new construction activity.
Multifamily Shows Greater Resilience
While single-family development slowed, multifamily construction spending increased 0.2% in July.
The modest gain highlights a continued divergence between the two housing segments. Multifamily development is showing greater resilience as developers and investors navigate affordability challenges and shifting housing demand.
Meanwhile, private nonresidential construction increased 0.4%, although factory investment continued to decline as the boost from the CHIPS and Science Act fades.
Source: Reuters
