Fig. [ ]. Source: NBER Macrohistory Database
The pattern of private spending on residential construction as opposed
to nonresidential suggests that its decline that started in 1927 and
accelerated in 1929 may have largely stemmed from the satiation of the
housing market with new housing units rather than the economic downturn
of 1929 because of the sheer magnitude of the increase in residential
construction spending between 1920 and 1926, especially compared to the
rise in its nonresidential counterpart.
The evidence that the accelerated decline in residential construction
spending started in late 1928 is twofold. First, as we have just shown,
residential construction spending had already been decreasing since
1927. Secondly, although there are no monthly data on spending on
private construction components, we can try to infer conclusions from
the monthly data on total construction value for 37 states published by
NBER.