The May monthly construction spending report was very bad as it was down 0.8% monthly and 2.3% yearly. The weakness is in residential construction, specifically, in single family residential construction. Residential construction spending fell 11.2% yearly. Single family spending fell 7.6% and multi-family spending was up 9.3%. Single family housing has become unaffordable which is why multi-family housing is being built at a higher growth rate.
On a related note, Oregon recently passed a law that effectively bans single family zoning laws, allowing more affordable multi-family housing to be built. The weakest part of this construction report was in home improvements. Spending on them fell 22% yearly. You can see in the “home improvements” chart above how sharp the descent has been. This is a terrible sign for the health of the consumer and the housing market. It’s worth noting how Home Depot and Lowe’s stocks haven’t fallen with this index; they have rallied with the overall market.