According to the Census Bureau, construction spending in the United States rose 0.1% in May, estimated at a seasonally adjusted annual rate of $2,210.2 billion. That’s above the revised April estimate of $2,207.1 billion.

However, for the same month, it fell 1.5% on a year-over-year basis. Nevertheless, it is measured good news, despite a 0.1% decrease in spending on new single-family housing projects (4 % decrease year-over-year). In fact, residential construction spending during the first five months of 2026 was down 2.7% from the same period in 2025, totaling $858.4 billion.

The dip in residential construction spending is attributed to increased oil prices resulting from the Iran war, which has driven inflation and mortgage rates higher. Data from mortgage finance agency Freddie Mac shows the average rate on a 30-year fixed-rate mortgage has increased by about 50 basis points since the conflict started in February, affecting home buying.

Residential housing wasn’t the only area to see a decline in spending. Private nonresidential structures, including power plants and factories, declined 0.3% in May. Spending on factory construction dropped 1.3%. All private construction spending of $1.669 trillion in May fell slightly in April, and was down 2.1% year-over-year.

Conversely, public spending of $541.2 billion was up 0.5% month-to-month and 0.3% year-over-year, with state and local government construction spending up 0.4%. Spending for federal government projects increased 1.3%.

Educational construction is the largest public nonresidential subcategory other than highway and street; both categories saw a 0.6% month-to-month jump.

In short, U.S. construction spending held steady month-over-month in May, but decreased year-over-year. Public spending and residential investment offset declines in private nonresidential sectors.