July’s Commerce Department report shows a modest residential spending rebound after six months of decline, signaling cautious optimism for the Mid Valley housing market. Private residential construction spending inched up 0.1 percent month-over-month, ending a six-month slide, though year-over-year outlays remain down 5.1 percent. Single-family and multifamily sectors have seen declines of 2.1 percent and 9.4 percent, respectively, from July 2024. Despite persistent headwinds from high interest rates and economic uncertainty, the residential spending rebound may pave the way for stabilization in the months ahead.
Housing Outlays Show Improvement
Total U.S. construction spending dipped 0.1 percent in July and fell 2.8 percent from a year earlier, reflecting broader caution across nonresidential sectors. Private residential spending, however, posted its first increase in seven months — a sign that builders are responding to resilient demand even as permit applications remain low. Homebuilders have held back on new starts amid concerns over rates and material costs, and low permit volumes suggest that many developers are waiting for clearer market signals. The mixed trend underscores a balancing act between rising construction expenses and ongoing buyer interest.
Builders Gain Confidence Amid Uncertainty
Local contractors in El Monte and Baldwin Park report steady inquiries for renovation and small-scale infill projects. Multifamily developers in Irwindale and Arcadia have paused major ground-breakings but continue preconstruction planning to align with potential rate cuts. Construction lenders are monitoring signals from the Federal Reserve, which may reduce the federal funds rate later this year in response to easing labor market pressures. If rate cuts materialize, borrowing costs could fall, encouraging builders to resume larger projects. The residential spending rebound has buoyed supplier orders for lumber and concrete, even as overall industry outlays remain below year-ago levels.
Community Benefits from Spending
A modest uptick in homebuilding spending translates into opportunities for local workers. In South El Monte, framing crews and carpenters have seen renewed demand for small-lot infill projects. Rosemead plumbers and electricians report increased service calls as renovation activity ticked up. Temple City landscape firms are securing contracts for new development setbacks and amenity spaces. Arcadia remodelers find steady work updating kitchens and bathrooms. Sustained spending growth supports trade apprenticeships at Rio Hondo College and local trade schools. These openings help residents offset living costs and build new skills in a challenging job market.
Outlook for the Mid Valley Housing Market
Although residential spending rebound offers hope, industry watchers caution that long-term recovery depends on permit trends and broader economic health. Builders may maintain a cautious stance until surveys reveal stronger consumer confidence and mortgage rates ease. Local governments in Baldwin Park and Rosemead are revisiting zoning guidelines to streamline approvals for affordable housing, aiming to attract new investment. City councils in El Monte and South El Monte continue to explore incentives for infill development to address housing shortages. Community lenders and nonprofit housing agencies stand ready to support projects that align with regional needs.
For the full Commerce Department construction spending report, visit https://www.commerce.gov/news .
