Construction starts up 6 percent in June 2020

Total construction starts improved 6 percent in June to a seasonally-adjusted annual rate of $641.4 billion, according to Dodge Data & Analytics.

This marks the second consecutive monthly gain in construction starts, following two consecutive months of decline in March and April due to the coronavirus.

In June, by segment, nonresidential building starts increased 6 percent while nonbuilding starts jumped 27 percent higher. In contrast, residential starts dropped 6 percent during June.

Through the first six months of the year, construction starts were 14 percent below the same period last year, according to Dodge. Nonresidential starts dropped 22 percent, nonbuilding starts fell 14 percent and residential starts were down 5 percent.

“Construction starts activity remains significantly weaker than year-ago levels, even though it has been slowly increasing since its nadir in April,” says Richard Branch, chief economist at Dodge Data & Analytics. “May’s gain in starts was fueled by a handful of very large projects, but June’s gain appears to be much more organic in nature. Construction starts should continue to post modest gains in the months to come as the economy continues to recover from the shortest and steepest recession in U.S. history.

“However, the recent acceleration in new COVID-19 cases in states such as Texas, Florida and California is a significant downside risk to the economy and the construction industry’s growth trajectory,” Branch says.

Nonbuilding construction

Nonbuilding construction starts boomed 27 percent higher in June to a seasonally-adjusted annual rate of $191.1 billion.

Utility/gas plants improved 108 percent due to the start of more than $2 billion in renewable power projects. The miscellaneous nonbuilding category gained 63 percent in June while environmental public works rose 38 percent. In contrast, construction starts for highways and bridges fell 4 percent in June.

The largest nonbuilding project to break ground in June was the $1.4 billion Federal Way Link extension in Seattle. Also starting during June were the $600 million Golden Hills Wind project in Sherman County, Oregon, and the $438 million Athos I solar facility in Desert Center, California.

Nonresidential building

Nonresidential building starts improved 6 percent in June to a seasonally-adjusted annual rate of $198.5 billion.

Institutional building starts increased 15 percent during the month while commercial starts rose 4 percent. However, manufacturing starts dropped 32 percent in June following the start of a $950 million steel plant in May.

The largest nonresidential building project to start in June was the $384 million Women’s and Children’s hospital tower in San Antonio. Also starting during the month was the $306 million Aligned Energy Data Center in Ashburn, Virginia, and the $294 million renovation of SeaTec International Airport in Seattle.

Residential building

Residential building starts dropped 6 percent in June to a seasonally-adjusted annual rate of $251.8 billion.

Both single and multifamily starts were lower in June, with single family starts down 7 percent and multifamily starts down 4 percent.

The largest multifamily structure to break ground in June was a $170 million mixed-use project in Jersey City, New Jersey. Also starting during June were the $113 million Flower Mart Apartments in Mountain View, California, and the $100 million 509 4th Avenue project in New York City.