U.S. construction spending falls as data centers offset housing slump

The U.S. Census Bureau reported July 2026 total construction spending at an adjusted annual rate of $2.1576 trillion, down 0.5% from June and down 3.8% year over year, the lowest July level since October 2023. Private construction slipped 0.5% to $1.6142 trillion, with residential spending falling 1.3% from June and 7.3% year over year, while nonresidential spending rose 0.1% month-to-month but remained down year over year. Within residential, single-family building weakened while home-improvement and multi-family categories showed mixed movements. Nonresidential spending was led by data-center and office activity, with the overall nonresidential figure down year over year despite pockets of strength in certain sectors. Analysts note that the July data highlight a sectoral tilt toward data centers and a broader drag on overall spending, potentially influencing the near-term outlook for housing and construction stocks. Market observers suggest the soft readings could affect expectations for the Federal Reserve’s rate path, with implications for interest rates and related financial markets.