Construction starts up in May 2020

Total construction starts increased 3 percent from April to May, according to Dodge Data & Analytics. Click to enlarge. Chart: Dodge Data & Analytics

Total construction starts improved 3 percent in May, compared to April, to a seasonally-adjusted annual rate of $595.1 billion, according to Dodge Data & Analytics.

May’s 3 percent gain comes on the heels of a 25 percent decline from March to April.

By segment, nonresidential buildings improved 8 percent in May while residential building starts increased 4 percent. Nonbuilding starts dropped 4 percent in May.

Several large nonresidential building projects broke ground in May, spurring the 3 percent uptick. However, without those large projects, there would have been no change in construction starts over the month, according to Dodge.

“While May’s increase in construction starts is certainly good news, the influence of several large projects undermines the notion that the construction sector has fully entered recovery,” says Richard Branch, chief economist for Dodge Data & Analytics. “Even as state and local areas re-open and bans on construction activity in Boston, New York City and other areas are lifted, the sector will have to contend with digging itself out from a deep economic recession.

“While the overall economy most likely hit bottom in May, the recovery will be slow since nearly 20 million jobs have been lost since February,” Branch adds. “The second half of 2020 will be a slog and gains will be modest over the short term.”

Through the first five months of this year, total construction starts are 12 percent below the same period in 2019. Nonresidential starts dropped 19 percent, nonbuilding starts were down 16 percent and residential starts were 3 percent lower.

Nonbuilding construction

Nonbuilding construction starts dropped 4 percent from April to May to a seasonally-adjusted annual rate of $149.1 billion, according to Dodge.

The utility/gas plant category fell 37 percent while the highway and bridge category dropped 4 percent. In contrast, the miscellaneous nonbuilding category gained 31 percent while environmental public works were flat.

The largest nonbuilding project to break ground in May was the $1.3 billion widening of Interstate 635 in Dallas. Also starting in May were the $789 million Lynnwood Link Extension in Lynnwood, Washington, and the $705 million widening of I-405 in Seattle.

Nonresidential building

Nonresidential building starts improved 8 percent in May to a seasonally-adjusted annual rate of $188.8 billion, following a 37 percent dip in April.

According to Dodge, the rebound was due to several large projects that broke ground in the manufacturing, education and hotel categories. Without those projects, May would have seen a “mild decline” in nonresidential building starts, Dodge says.

The largest nonresidential building project to break ground in May was the $950 million SDI Steel Complex in Sinton, Texas. Also starting during May was the $355 million Fig + Pico hotel towers in Los Angeles and the $360 million Wolf Point South Tower B building in Chicago.

Residential building

Residential building starts increased 4 percent in May to a seasonally-adjusted annual rate of $257.2 billion.

Multifamily starts rose 10 percent while single family starts gained 2 percent during the May.

The largest multifamily structure to get underway in May was the $180 545 Vanderbilt Ave mixed-use development in Brooklyn, New York. Also starting during the month was the $150 million 354 N Union apartment tower in Chicago and the $150 million Ripley II – Solaire 8200 Dixon Luxury Apartments in Silver Spring, Maryland.