Dodge: Construction starts take a dive in November

Total construction starts fell 15 percent in November, dropping to a seasonally adjusted annual rate of $927 billion, according to Dodge Construction Network.

Nonresidential building starts fell 29 percent in November while residential starts lost 6 percent. Nonbuilding starts dropped 2 percent.

Through 11 months of 2023, total construction starts trail 2022 by 4 percent. Residential and nonresidential starts are down 14 percent and 7 percent, respectively, but nonbuilding starts are up 19 percent.

“Construction starts are deeply feeling the impact of higher rates,” says Richard Branch, chief economist at Dodge Construction Network. “While the Federal Reserve seems poised to start cutting rates in the new year, the impact on starts will lag. As a result, starts are expected to be weak through the midpoint of 2024 before growth resumes.”

Nonbuilding

Nonbuilding construction starts in November fell 2 percent, amounting to a seasonally adjusted $223 billion.

According to Dodge Construction Network, highway and bridge starts decreased 8 percent, environmental public works starts fell 4 percent, utility/gas starts rose 17 percent and miscellaneous nonbuilding starts improved 1 percent.

Through 11 months of the year, nonbuilding starts are up 19 percent overall. Utility/gas plants rose 49 percent and miscellaneous nonbuilding starts increased 18 percent. Highway and bridge starts gained 9 percent, and environmental public works rose 11 percent.

The largest nonbuilding projects to break ground in November were the $834 million I-405 Brickyard to SR 527 improvements in Bothell, Washington, the $406 million second phase of the Sherco solar farm in Becker, New Mexico, and a $353 million addition to the Silverhawk generating station in Moapa, Nevada.

Nonresidential

Nonresidential building starts, meanwhile, decreased 29 percent in November to a seasonally adjusted annual rate of $345 billion.

According to Dodge Construction Network, manufacturing starts plummeted 74 percent following several strong project starts in October.

Commercial starts fell 19 percent, with office buildings being the only category to see a gain. Institutional starts rose 7 percent due to a significant uptick in health care activity.

Through 11 months of the year, total nonresidential starts are 7 percent lower than the 11-month mark of 2022. Institutional starts gained 5 percent while commercial and manufacturing starts fell 13 percent and 18 percent, respectively.

The largest nonresidential building projects to break ground in November were the $1.9 billion Children’s Hospital of Philadelphia inpatient tower in Pennsylvania, the $1.6 billion LG Energy battery plant in Queen Creek, Arizona, and the $750 million expansion of the Iowa Army Ammunition Plant in Middletown, Iowa.

Residential

Residential building starts declined 6 percent in November to a seasonally adjusted annual rate of $359 billion, according to Dodge Construction Network.

Single-family starts increased 1 percent while multifamily starts fell 19 percent.

Through 11 months of 2023, total residential starts are down 14 percent. Single-family starts dropped 15 percent and multifamily starts are down 12 percent.

The largest multifamily structures to break ground in November were the $200 million 55 Broad Street residential conversion in New York City, the $200 million redevelopment of The Superman Building in Providence, Rhode Island, and the $185 million Union West mixed-use development in Raleigh, North Carolina.

Related: How construction starts fared in October 2023