Dodge: Construction starts slip downward 6 percent

By |  October 18, 2023

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Total construction starts fell 6 percent in September to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network.

The 6 percent decline in September follows a 6 percent increase in August that took total construction starts to $1.3 trillion. In September, however, nonresidential starts lost 4 percent, residential starts declined 6 percent and nonbuilding starts fell 9 percent.

Through nine months of the year, total construction starts are 3 percent below the nine-month mark of 2022. Residential and nonresidential starts are down 17 percent and 7 percent, respectively, while nonbuilding starts are up 25 percent on the year.

“Risks continue to mount for the construction sector,” says Richard Branch, chief economist at Dodge Construction Network. “Over the last 12 months, construction starts have essentially froze as rates increased and credit tightened. The industry needs further adjusting as rates are expected to stay higher for longer, along with the potential for higher energy costs and continued political uncertainty. A return to broad-based growth in construction starts is still some time away.”

Nonbuilding

Nonbuilding construction starts dropped in September, falling 9 percent to a seasonally adjusted annual rate of $345 billion.

Highway and bridge starts lost 15 percent, and environmental public works starts fell 29 percent.

Not all sectors fell, though, as miscellaneous nonbuilding starts rose 4 percent and utility/gas plant starts are up 14 percent.

The largest nonbuilding projects to break ground in September were the $4.5 billion Sun Zia transmission line across Arizona and New Mexico, the $525 million fourth phase of the Cedar Springs wind farm in Converse County, Wyoming, and the $485 million Prospect Lake Clear Water Center in Fort Lauderdale, Florida.

Nonresidential

Nonresidential building starts fell 4 percent in September to a seasonally adjusted annual rate of $459 billion.

Commercial starts rose 6 percent due to strength in data center work and retail. Institutional starts fell 8 percent in September despite a healthy gain in education starts, and manufacturing starts declined 13 percent.

On a year-to-date basis through September, total nonresidential starts are 7 percent lower than that of 2022. Institutional starts gained 5 percent while commercial and manufacturing starts fell 6 percent and 31 percent, respectively.

The largest nonresidential building projects to break ground in September were the $2.5 billion Hyundai/SK EV battery plant in Cartersville, Georgia, a $1.1 billion prison in Elmore, Alabama, and the $1 billion Microsoft data center in Mount Pleasant, Wisconsin.

Residential

Residential building starts fell 6 percent in September to a seasonally adjusted annual rate of $394 billion.

Single-family starts gained 1 percent while multifamily starts lost 17 percent.

On a year-to-date basis through September, total residential starts are down 17 percent. Single-family starts are 19 percent lower, and multifamily starts are down 12 percent.

The largest multifamily structures to break ground in September were the $385 million first phase of the South Pier Residential Towers in Tempe, Arizona, the $275 million first phase of the Casa Bella Condominiums in Miami, and the $260 million Chapel Block mixed-use development in Philadelphia.

Regions

Regionally, total construction starts in September fell in the Northeast, Midwest, South Atlantic and West. They rose modestly in Dodge’s South Central region.

Related: Manufacturing propels construction starts forward in August

Kevin Yanik

About the Author:

Kevin Yanik is editor-in-chief of Pit & Quarry. He can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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