US Dec. construction spending rises 0.3% m/m; est. +0.2%
TL;DR
U.S. construction spending rose 0.5% month-over-month in December 2025, exceeding estimates, with private residential projects driving growth. However, public spending declined, and the sector faces challenges from high mortgage rates and trade policies.
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US Dec. construction spending rises 0.3% m/m; est. +0.2%
U.S. Construction Spending Rises 0.5% in December, Surpassing Estimates
U.S. construction spending increased by 0.5% month-over-month (m/m) in December 2025, exceeding the estimated 0.2% rise and marking the third consecutive monthly gain, according to data from the Commerce Department's Census Bureau. The year-over-year (y/y) growth held steady at 4.3%, aligning with November's figure but lagging behind the 9.3% y/y growth recorded in December 2023. For 2024 as a whole, construction spending rose 6.5%, reflecting resilience despite persistent high mortgage rates and policy-driven uncertainties.
Private construction spending led the December increase, surging 0.9% m/m, driven by a 1.5% rise in residential projects. Single-family homebuilding rose 1.0% m/m, while home improvement spending jumped 2.6% m/m, accounting for 41.7% of residential private construction. However, multi-family housing declined 0.3% m/m, continuing a 13-month downward streak. Nonresidential private construction edged up 0.1% m/m, supported by gains in office, communication, and utilities sectors, though healthcare, commercial, and lodging projects saw declines according to Haver data.
Public construction spending fell 0.5% m/m, with both residential and nonresidential government projects dropping 0.5% each. Declines were concentrated in healthcare, water supply, and transportation infrastructure, though highways and streets spending rose 0.7% m/m, the fourth increase in five months.
The sector faces headwinds from elevated mortgage rates, which have risen alongside Treasury yields amid concerns over inflationary pressures from President Trump's trade policies, including 25% tariffs on Canadian and Mexican goods. These tariffs threaten to raise lumber costs and reduce housing affordability. Meanwhile, the Federal Reserve's 100-basis-point easing since September has yet to offset the drag from 2022–2023 rate hikes totaling 5.25 percentage points.
Construction spending remains below its 18.6% y/y peak in April 2022 but reflects ongoing adaptation to regulatory and economic shifts. Analysts will monitor how policy developments and rate trends shape momentum in 2026.
Reuters, Feb. 3, 2025: Reuters, Feb. 3, 2025
Haver, Feb. 2025: Haver, Feb. 2025
