Southern California construction spending declined in June as elevated borrowing costs continued to slow residential development across the region. The latest figures from the U.S. Census Bureau point to a cautious construction market that could limit future housing supply while demand for homes remains steady.
Construction spending reached a seasonally adjusted annual rate of $2.17 trillion in June, down 0.1% from May and 3.2% below the same month last year. During the first half of 2026, overall construction spending trailed the pace recorded during the same period in 2025 by 3.5%.
Residential construction accounted for much of the slowdown. Investment in new housing declined 0.3% during the month. Spending on single-family homes fell 0.6% in June and was down 3.3% compared with one year earlier. Multifamily construction, including apartments and condominiums, also declined 0.7%.
For communities across the San Gabriel Valley, including El Monte, South El Monte, Baldwin Park, Rosemead and Irwindale, the trend could have lasting implications. Fewer housing projects under construction today may translate into fewer homes available for future buyers and renters.
Southern California Construction Spending Reflects Caution
Higher financing costs remain one of the biggest challenges facing builders. Freddie Mac recently reported the average 30-year fixed mortgage rate reached 6.66%, increasing borrowing costs for both homebuyers and developers. Construction loans used to purchase land, hire contractors and complete projects have become more expensive, making some developments less financially practical.
As a result, some builders are delaying projects until financing conditions improve. The slowdown comes as Southern California continues to experience limited housing inventory and steady buyer demand, making it more difficult to expand the region’s housing supply.
Not every segment of the construction industry weakened during June. Private nonresidential construction, which includes commercial buildings and offices, increased 0.1%, although manufacturing projects declined 1.2%. Public construction spending, including highways, schools and other government-funded infrastructure, remained essentially unchanged.
Public investment may continue supporting construction employment even as residential activity slows. More information about national construction spending is available from the U.S. Census Bureau at https://www.census.gov/construction/c30/ and mortgage market data is available from https://www.freddiemac.com.
Housing Supply Faces Continued Pressure
The outlook for the remainder of the year remains uncertain as elevated interest rates and inflation continue to influence construction decisions. Until financing becomes more affordable, builders may remain cautious about launching new residential developments.
For local residents, the slowdown underscores the connection between national economic conditions and neighborhood housing markets. While buyers may have more time to negotiate than during the pandemic housing boom, fewer homes under construction today could mean fewer housing options tomorrow. If Southern California construction spending continues to soften, the region’s ongoing housing shortage is likely to remain a significant challenge for families, first-time buyers and renters.
