The latest construction spending numbers for August 2026, released on October 1st by the U.S. Census Bureau, showed overall construction spending up 0.9% from July but down 1.7% year-over-year.
Spending on private construction projects, too, increased 1.1% from July, and residential construction spending likewise increased 1.1%. Over the first eight months of 2026, overall spending was down 3.1% compared to the same period last year.
Maor Greenberg, co-founder and CEO of Spacial, an AI-powered structural engineering platform for residential construction and a 19-year veteran of the construction and real estate industries, says that the numbers suggest a “steady” market, and that the coming months may reflect the impacts of the latest interest rate increase by the Federal Reserve. He expects the hike to hit luxury homes less, and he builds them in the Bay Area, where AI wealth has created a buyer pool that can still afford the high end.
- Holding steady: “The data suggests that the market is holding steady. Single-family starts were running ahead of permits in August, which tells me builders are putting already-approved lots into the ground. That makes sense. Even in a soft market, there’s a point where starting to build a house makes more sense than waiting for more favorable conditions, because you’re paying money to hold onto land. That moves the problem down to selling: To do that, builders offer incentives and cut prices. Margins get tighter, but you’re not losing as much money.”
- Rate hike effect?: “August was the last month before the Fed’s latest rate hike, so I think we’ll see more of the impact in September and October. Builders feel a rate increase from both sides. Most construction loans are floating, so our carrying costs go up on houses that are already under construction. Then the buyer comes in looking at a mortgage of around 7% and any rate buydown we offer is starting from a higher rate.”
- AI money and the high end: “We’ve decided to focus on high-end luxury homes. Luxury has held up better than the broader housing market this year. That doesn’t mean luxury is immune, but I still expect the rate increase to have less of an impact here than it does in other parts of the market. But the primary reason is where we build. The Bay Area has always been closely tied to where the money is being made, and right now, a lot of that money is coming from AI. People can debate whether AI is a bubble, but the major AI companies in this region aren’t going away anytime soon and they’ve created tremendous wealth in just a few years. In a region that already has a serious shortage of housing, this means a buyer pool that can still afford the higher end of the market.”
