U.S. construction spending declines for the third consecutive month in April, reflecting ongoing pressures from elevated interest rates and softening housing demand. According to the Commerce Department, total outlays fell 0.4% month over month, with residential construction leading the pullback.
Home Renovations Contribute to Construction Spending Decline
The construction spending decline in April was driven largely by a 0.9% drop in residential building. Year-over-year, residential outlays were down 4.7%, with total spending at a seasonally adjusted annual rate of $904.6 billion—the lowest level since September 2024.
New single-family construction posted the sharpest retreat, down 1.1% in April alone. This marks the third monthly drop for this category, underscoring the effects of sustained high borrowing costs on homebuyer demand and builder sentiment.
Multifamily and Renovation Spending Slows
While multifamily construction held firmer, it too showed signs of hesitation. Spending on private apartment projects slipped 0.1% in April after two months of modest growth. Home improvement outlays also declined, falling 0.8% from March and down 5.5% compared to a year ago.
The broad-based nature of the slowdown in construction spending suggests both consumer caution and a cooling investment climate. Many homeowners and developers are delaying projects amid uncertain market conditions and high material costs.
Trade Pressures Amplify Construction Spending Decline
Trade tensions continue to weigh on construction inputs. With tariffs and global supply issues persisting, builders are bracing for higher material prices in the months ahead. These cost pressures may further impact construction spending, especially on large-scale or speculative projects.
While the construction sector often reflects broader economic trends, it remains especially sensitive to shifts in interest rates. The current environment has made financing new builds more expensive, putting both residential and commercial projects at risk of delay or cancellation.
Softness Likely to Persist
Analysts do not expect a sharp rebound in construction activity in the near term. With interest rates expected to remain elevated and inflationary risks lingering, many in the industry anticipate continued caution through the summer.
Still, some optimism remains in select regions and sectors. Areas with stronger job growth or housing shortages may see more resilient construction activity. For now, though, the national trend points to a measured pace of investment.
April’s figures confirm a clear pattern: that construction spending declines is no longer an isolated dip but part of a broader adjustment as the market recalibrates to tighter financial conditions and shifting demand.
