Home improvements drove September’s construction spending drop

U.S. construction spending fell 1.9% in September, with a sharp drop in home improvements pulling down residential activity while spending on new single-family houses held steady. The residential headline combines several kinds of work with different results.

The Census Bureau's November 2 report puts total construction at a seasonally adjusted annual rate of $2.186 trillion. Private residential spending fell 5.5% from August to an $848.8 billion rate. Private nonresidential spending rose 1.1%.

The overall decline followed a revised August increase of 2.0%. Reuters reported that economists it surveyed had expected a 0.3% September gain. August's increase had initially been reported as 0.9%, a substantial revision to the starting point for this month's comparison.

Renovations explain the residential drop

The detailed Census table shows new single-family construction essentially unchanged at a $403.4 billion annual rate. New multifamily work, including apartments and condominiums, edged up 0.1% to $115.9 billion.

Residential improvements are included in the private residential total but are not listed separately in that table. Subtracting new single-family and multifamily work leaves an implied improvements rate of about $329.5 billion for September, compared with $378.7 billion in August. That is a decline of about 13.0%, calculated by Edit USA from the published figures. Rounding can affect the result.

In dollar terms, that implied improvements decline accounts for virtually all of the $49.2 billion reduction in the private residential annual rate. The tables do not count canceled projects or identify why individual owners changed their plans.

Reuters attributed the residential weakness largely to renovations and suggested high materials costs were a likely factor. The Census release itself reports spending estimates without establishing that cause.

How the sectors compare

Amounts are seasonally adjusted annual rates. Monthly changes compare September with revised August estimates. Categories overlap.

Public construction's small decline was within the report's sampling-error range. Census says there is insufficient evidence to conclude that the actual monthly change was different from zero. The larger private residential decline was statistically significant under the agency's measure.

What the spending measure includes

Census measures the value of construction work installed or erected during the period. Its definitions include materials, labor, contractor profit, architectural and engineering work, and related project costs. Work on a project can count even when that project began in an earlier month.

Residential improvements include remodeling, additions and major replacements, such as finishing an attic, modernizing a kitchen or replacing a furnace. Routine maintenance and repairs are excluded, as is buying the land. That scope helps explain why the residential spending measure can move differently from a count of newly started houses.

The dollar figures are adjusted for seasonal patterns, but not for price changes. A change can therefore reflect shifts in the amount of work, its cost or both. The report does not measure the sale price of an existing home or the price a contractor will quote for a particular renovation.

An annual rate expresses the month's seasonally adjusted pace over a full year. It is not the amount of work completed during September alone. The separate unadjusted table puts September construction at $196.3 billion.

The preliminary estimates will be revised as more information arrives. Census cautions that establishing a trend can take two months for total construction and as long as eight months for individual categories. Across the first nine months of 2026, actual construction spending was $1.650 trillion, down 2.9% from the same period in 2025.

The October construction report is scheduled for December 1.