Private Residential Construction Slips as Remodeling Weakens
Catherine Koh
November 2, 2026
Private residential construction spending decreased in September 2026, driven by a steep decline in improvement (remodeling) spending. According to the U.S. Census Bureau, private residential construction spending registered a seasonally adjusted annual rate (SAAR) of $848.8 billion in September, down 5.5% from revised August estimates and 8.9% lower than last year.
The decline was primarily attributed to a sharp drop in improvement spending, which fell 13.0%. Year-over-year, remodeling spending was down a significant 18.0%. Both single-family and multifamily construction spending remained steady from August but dipped 2.4% and 0.2% respectively, compared to the previous year. The slowdown in single-family construction aligns with weak builder sentiment, as reflected in the NAHB/Wells Fargo Housing Market Index (HMI), amid rising interest rates, energy, and material costs.
The NAHB construction spending index below illustrates the slowing trend in single-family construction since early 2024, impacted by elevated interest rates and ongoing uncertainty over building material tariffs. Multifamily construction spending growth also peaked in June 2023 and has plateaued since late 2024.
In contrast, improvement spending has been on an upward trend since 2023, supported by an aging housing stock and sustained demand for renovations. However, the latest data suggests a potential soft patch for remodeling in 2026.
Private nonresidential construction spending continued its upward trajectory. September's spending rose 1.1% to a SAAR of $790.6 billion, a 2.3% increase from the previous year. Data center construction, a key subcategory within office construction, experienced a significant 8.6% month-over-month and 90.3% year-over-year surge, driven by the buildout of artificial intelligence infrastructure. Data centers accounted for 12.2% of total private nonresidential construction spending in September 2026.
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