Calendar › Construction spending › 2026-11-02
Construction Spending −1.9% vs +0.4% Est — Home Improvements Fall 13%, Office +5.0%
Fundamentals · 2026-11-02
Construction spending −1.9% m/m in September (±0.7%) vs +0.4% consensus, to a $2,186.1bn annual rate; August revised up to +2.0% from a +0.9% first print; −2.7% y/y, year to date −2.9%; private residential −5.5%, but new single-family 0.0% and new multifamily +0.1%, so home improvements fell about 13% (derived); private nonresidential +1.1% (±0.5%); office +5.0% m/m, +33.4% y/y; power +0.9% m/m, +11.1% y/y; manufacturing +0.1% m/m, −17.0% y/y; public −0.1%, not significant; next release 1 December.
What It Changes
- The headline is a big miss that is mostly one noisy line. Spending fell 1.9% against a 0.4% rise expected, and the whole fall sits in private residential improvements; new single-family and multifamily building were flat.
- Take improvements out and the picture is steady to firm. Private nonresidential rose a statistically significant 1.1%, and public spending was unchanged.
- August and September need reading together. August was revised up to +2.0% from +0.9%, so two months net out at roughly flat, which is where July left the level.
- The trend has not changed: spending is 2.7% lower than a year ago in nominal dollars, with factory construction down 17% and offices, which include data centres, up a third.
Impact
- USD — Slight bearish — a 2.3-point miss on the headline, but the miss is concentrated in the line with the widest error band, and it landed at 10:00 alongside ISM, which beat.
- US Indices (ES / NQ / YM / RTY) — Mixed — the residential drop is a soft read for homebuilders and building-products names, while the office and power lines confirm the AI build-out is still running.
- NQ's read is the data-centre line. Office construction, where Census classifies data centres, rose 5.0% on the month to a 33.4% gain on the year, and power construction is up 11.1% on the year.
- The residential side lands on homebuilders and building-materials names, but with new single-family flat the drop says little about new-home demand.
Inside The Number
Construction spending ran at a seasonally adjusted annual rate of $2,186.1 billion in September, 1.9% (±0.7%) below August's revised $2,227.4 billion and well under a 0.4% rise expected (TradingEconomics). The 90% confidence interval excludes zero, so Census treats the fall as statistically significant. Spending was 2.7% below September 2025 and, through nine months, 2.9% below the same period last year.
The revision matters as much as the print. August, first reported at +0.9%, is now +2.0%, and July is now −0.2%. The level in September is back almost exactly where it was in July ($2,184.0 billion) and June ($2,187.4 billion). Read over three months, construction spending is flat, not collapsing.
The whole drop is home improvements. Private residential spending fell 5.5% (±1.3%) to $848.8 billion. But new single-family construction was unchanged at $403.4 billion and new multifamily rose 0.1% to $115.9 billion. Census does not publish improvements as a separate line in this release, but private residential includes them, so subtracting the two new-build lines gives about $329.5 billion in September against $378.7 billion in August, a fall of about 13%. On the same arithmetic improvements rose about 9% in August. This is the noisiest part of the release: private residential carries a coefficient of variation of 5.0%, against 0.5% for private nonresidential.
Private nonresidential rose, and the rise is significant. It increased 1.1% (±0.5%) to $790.6 billion and is 2.3% higher than a year ago. The engine is office, which Census uses for data centres: private office construction rose 5.5% on the month and 39.5% on the year, and has climbed every month since at least May, from $115.2 billion to $145.6 billion. Private power rose 1.2% on the month and 12.1% on the year.
Factories are the drag on the year. Private manufacturing construction slipped 0.3% to $167.2 billion and is 17.9% below a year ago; year to date it is down 21.7% on an unadjusted basis. That is the same buildout August's construction brief flagged as crashing, and it has not turned. The rest of private nonresidential is mixed: commercial −0.3% (−4.4% y/y), lodging +0.3%, health care flat, educational −0.6%.
Public spending went nowhere. Public construction was $546.8 billion, −0.1% (±1.3%), a change Census says is not statistically different from zero. Highways −0.3%, educational flat, transportation +0.4%, water supply +0.8%, sewage and waste +0.6%, conservation and development −4.1%. Public spending is 1.0% higher than a year ago, the only major branch growing on the year besides private nonresidential.
These are nominal dollars. Census does not adjust for price changes, and today's ISM report had input costs rising for a 25th month, led by steel, aluminum and copper. A flat nominal level with materials still rising means real construction activity is shrinking. September's figures also feed the second estimate of third-quarter GDP, where a drop in improvements would weigh on residential investment.
The Internals
Value of construction put in place, seasonally adjusted annual rate ($ billions):
Category · Sep 2026 · Aug 2026 · Jul 2026 · m/m · y/y
Total construction · 2,186.1 · 2,227.4 · 2,184.0 · −1.9% · −2.7%
Total private · 1,639.3 · 1,680.3 · 1,638.0 · −2.4% · −3.8%
Private residential · 848.8 · 898.0 · 866.4 · −5.5% · −8.9%
New single-family · 403.4 · 403.5 · 403.2 · 0.0% · −2.4%
New multifamily · 115.9 · 115.8 · 115.6 · +0.1% · −0.2%
Improvements (derived) · 329.5 · 378.7 · 347.7 · −13.0% · −18.0%
Private nonresidential · 790.6 · 782.3 · 771.6 · +1.1% · +2.3%
Private office · 145.6 · 138.1 · 130.2 · +5.5% · +39.5%
Private power · 171.7 · 169.7 · 167.3 · +1.2% · +12.1%
Private manufacturing · 167.2 · 167.7 · 167.7 · −0.3% · −17.9%
Private commercial · 115.9 · 116.2 · 116.9 · −0.3% · −4.4%
Private health care · 57.7 · 57.7 · 57.5 · 0.0% · −1.7%
Private educational · 24.5 · 24.7 · 24.7 · −0.6% · −7.4%
Private lodging · 23.6 · 23.5 · 23.5 · +0.3% · −2.8%
Total public · 546.8 · 547.1 · 546.0 · −0.1% · +1.0%
Public highway and street · 149.2 · 149.7 · 149.7 · −0.3% · +3.5%
Public educational · 113.1 · 113.1 · 112.9 · 0.0% · −1.4%
Public transportation · 53.6 · 53.4 · 53.3 · +0.4% · +2.6%
Public sewage and waste · 52.8 · 52.5 · 52.5 · +0.6% · −1.5%
Public water supply · 35.7 · 35.4 · 35.0 · +0.8% · −0.5%
Improvements are derived as private residential minus new single-family and new multifamily; Census includes them in private residential without a separate line in this release.
Total construction by type, all owners:
Type · Sep 2026 ($bn) · m/m · y/y
Office · 162.3 · +5.0% · +33.4%
Power · 191.7 · +0.9% · +11.1%
Manufacturing · 170.2 · +0.1% · −17.0%
Highway and street · 150.9 · −0.4% · +3.9%
Educational · 137.6 · −0.1% · −2.6%
Commercial · 122.9 · −0.2% · −4.0%
Health care · 76.5 · −0.3% · +0.4%
Transportation · 73.9 · +0.4% · +1.7%
Headline against expectations and the prior:
Measure · Actual · Consensus (TradingEconomics) · Prior
Total m/m · −1.9% · +0.4% · +2.0% revised, +0.9% first print
Monthly path of the total (seasonally adjusted, $ billions):
Month · Level · m/m
May 2026 · 2,168.4 · n/a
Jun 2026 · 2,187.4 · +0.9%
Jul 2026 · 2,184.0 · −0.2%
Aug 2026 · 2,227.4 · +2.0%
Sep 2026 · 2,186.1 · −1.9%
Year to date, not seasonally adjusted:
Category · Jan-Sep 2026 ($bn) · Jan-Sep 2025 ($bn) · Change
Total · 1,649.6 · 1,698.6 · −2.9%
Private residential · 671.3 · 703.2 · −4.5%
Private nonresidential · 569.0 · 590.7 · −3.7%
Private office · 91.2 · 77.5 · +17.6%
Private manufacturing · 128.9 · 164.7 · −21.7%
Total public · 409.3 · 404.8 · +1.1%
Against This Morning's Open
- The Open listed construction spending at 10:00 with a 0.4% consensus against a 0.9% prior, tagged USD, and did not set an expectation beyond that.
- It printed −1.9%, a 2.3-point miss, with the prior revised up to +2.0%; The Open's focus at 10:00 was ISM's prices component, and construction was not the release it was watching.
What This Sets Up
- Next print: October construction spending, Tuesday 1 December, 10:00 ET.
- The test is whether improvements bounce. If private residential recovers most of September's 5.5% while new single-family stays flat, September was noise; a second fall would make it a trend.
- The office and power lines are the other thing to watch: another 5% month in office would keep the data-centre build-out as the main source of growth in private nonresidential.
What Is This?
- What it is: The Census Bureau's monthly estimate of the value of construction put in place, the dollar value of work done in the month on new buildings, structures and improvements, split into private residential, private nonresidential and public. It is built from several surveys and administrative sources, published about a month after the reference month, and revised in each of the following months.
- Why it matters: It feeds the structures and residential investment lines of GDP, and right now it shows where capital is going: into data centres and power, out of factories and housing. With the Fed holding at 3.75%-4.00%, the residential lines are the most rate-sensitive part of the release.
- How to read it: Figures are seasonally adjusted annual rates in nominal dollars, not adjusted for price changes, so a rise can be cost inflation rather than more work. Each change comes with a 90% confidence interval; if it includes zero, Census does not consider the change significant. Census itself says one month can be irregular and it may take two months to establish a trend for the total and up to eight for categories. Census puts the average absolute revision to the total from first to second estimate at 0.65%, so a half-point miss can disappear in a month.
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_For informational purposes only. Not investment advice._