U.S. construction spending took a sharp and unexpected downturn in July, recording its worst performance since October 2022. The 0.3% decline, following a stagnant June, defied economists’ expectations of flat growth and underscores widespread weakness in the sector.
Overall construction spending fell 0.3% in July, down from no growth in June and the steepest drop in nearly two years.
- Residential construction: Declined 0.4%, driven by a significant 1.9% drop in single-family home construction.
- Multi-family construction: Was the least affected, but spending remained flat compared to June, offering little solace.
Year-over-year: Single-family construction spending is still up 4.0%, while multi-family spending remains down 4.7%.
The bottom line: The steep drop in July signals that the construction sector is facing significant headwinds, with no clear signs of relief on the horizon. The continued decline in residential construction, particularly in single-family homes, raises concerns about the sector’s near-term outlook.
