Dodge: Construction starts take a dive in November

Total construction starts fell 18 percent in November to a seasonally adjusted annual rate of $926.3 billion, according to Dodge Construction Network.

In November, nonresidential building starts lost 25 percent, nonbuilding shed 21 percent and residential starts dropped 5 percent.

Through 11 months of 2022, total construction starts were 14 percent higher compared with the same stretch of 2021. Nonresidential building starts rose 36 percent over the year, residential starts were down 1 percent and nonbuilding starts were up 16 percent.

“Month-to-month volatility in construction activity continues to reign supreme as uncertainty mounts over the economy in 2023,” says Richard Branch, chief economist at Dodge Construction Network. “Higher interest rates and fear of recession are first and foremost on the mind of most builders and developers, and potentially restraining starts activity.

“However, as some material prices head lower and more public dollars come into the market for infrastructure and manufacturing projects, the year is ending with a fair bit of momentum,” Branch adds. “Next year will be a challenge, but nothing like the sector faced during the Great Recession.”

Nonbuilding

Nonbuilding construction starts fell 21 percent in November to a seasonally adjusted annual rate of $218.1 billion.

The only nonbuilding category to post a gain for the month was utility/gas, which rose 3 percent. Highway and bridge starts fell 32 percent, miscellaneous nonbuilding was 30 percent lower and environmental public works fell 7 percent.

Through the first 11 months of the year, total nonbuilding starts were 16 percent higher than in 2021. Highway and bridge starts were 25 percent higher, environmental public works were 17 percent higher and utility/gas plants were up 11 percent. Miscellaneous nonbuilding starts were 2 percent lower on a year-to-date basis.

The largest nonbuilding projects to break ground in November were the $678 million 577MW Fox Squirrel solar farm in Madison County, Wisconsin, a $522 million coastal resilience project near the Brooklyn Bridge in Brooklyn, New York, and the $465 million 300MW White Rock wind project in Anadarko, Oklahoma.

Nonresidential

Nonresidential building starts, meanwhile, fell 25 percent in November to a seasonally adjusted annual rate of $361.6 billion.

Commercial starts fell 33 percent during the month, institutional starts were 12 percent lower and manufacturing dropped 69 percent. The only nonresidential categories to show a gain on a month-to-month basis were health care, public buildings, religious and recreation starts.

Through the first 11 months of the year, nonresidential building starts were 36 percent higher than the first 11 months of 2021. Commercial starts grew 25 percent, and institutional starts rose 19 percent. Manufacturing starts were 160 percent higher on a year-to-date basis.

The largest nonresidential building projects to break ground in November were the $1.1 billion Harbor-UCLA Medical Center in Torrance, California, the $800 million Project Velvet Meta data center in Kansas City, Missouri, and the $500 million Eli Lilly manufacturing campus in Concord, North Carolina.

Residential

Lastly, residential building starts fell 5 percent in November to a seasonally adjusted annual rate of $346.5 billion.

Single-family starts lost 9 percent while multifamily starts gained 1 percent.

Through the first 11 months of the year, residential starts were 1 percent lower when compared with the same timeframe in 2021. Multifamily starts were up 26 percent while single-family housing slipped 12 percent.

The largest multifamily structures to break ground in November were the $345 million 601 North Central Avenue mixed-use building in Phoenix, the $350 million YMCA of Middle Tennessee residential tower in Nashville, Tennessee, and the $250 million Halletts Point (Building 3) in Astoria, New York.