Construction spending rebounded in October

January 21, 2026

Construction spending rose 0.5% in October after falling 0.6% in September. The data releases were delayed due to the government shutdown that ended on November 12. Compared to a year ago, construction spending fell 1% in October. Data are not adjusted for inflation; construction costs excluding labor jumped 2.7% compared to October of last year and have been reaccelerating since May 2025.

Private residential construction soared 1.3% in just the month of October on stronger home improvement projects. Single-family and multifamily construction both lost ground for the month and compared to a year ago. Demand for single-family homes is hampered by still-high mortgage rates while rising job insecurity is keeping potential buyers sidelined. Builders have taken notice; they remain pessimistic about housing construction. New multifamily construction has slowed due to a significant supply of apartments coming on line in many parts of the country that is pushing down rents. That trend recently reversed; multifamily permits have started to show a pickup compared to year-ago levels. We expect to see more apartment construction activity in 2026.

Private nonresidential construction slipped 0.2% in October on weaker office, healthcare, communication and manufacturing infrastructure. Data centers, included in the office category, continued to hit new record spending levels in October; all other office categories continued their downward trend. In the third quarter, real private nonresidential structures investment fell for the seventh quarter in a row, remaining a drag on overall economic growth.

Manufacturing construction hit many records in 2024 but has since been on a downward trend, especially in computer, electronic and electrical infrastructure (this includes semiconductor manufacturing plants). Spending on manufacturing construction has fallen for nine consecutive months; manufacturing employment lost 68,000 jobs in 2025.

Public construction spending inched up 0.1% in October. The bulk of spending occurs at the state and local government levels, which gained 0.3% on the month; healthcare, educational facilities, water supply and conservation and development construction posted gains. Federal spending fell 2%.

Construction wages as reported in the employment cost index rose 4.1% in the third quarter compared to the same time a year ago. That is higher than the overall private sector rate of 3.6% and shows pay is rising faster in construction as labor shortages remain a concern for builders.