Dodge: Construction starts up 4 percent in May

Total construction starts rose 4 percent in May to a seasonally adjusted annual rate of $979.5 billion, according to Dodge Construction Network.

Nonresidential building starts rose 20 percent in May, while residential starts fell 4 percent and nonbuilding lost 2 percent during the month.

Year-to-date, total construction was 6 percent higher than in the first five months of 2021. Nonresidential building starts rose 17 percent year-to-date, residential starts gained 3 percent and nonbuilding starts were 5 percent lower.

For the 12 months ending May 2022, total construction starts were 10 percent above the 12 months ending May 2021. Nonresidential starts were 20 percent higher on a 12-month, rolling sum basis, residential starts gained 8 percent and nonbuilding starts were down 3 percent.

“The construction sector has become increasingly bifurcated over the past several months,” says Richard Branch, chief economist at Dodge Construction Network. “Nonresidential building construction is clearly trending higher with broad-based resilience across the commercial, institutional and manufacturing spaces. However, growth in the residential market has been choked off by higher mortgage rates and rapidly falling demand for single family housing.

“Nonbuilding starts, meanwhile, have yet to fully realize the dollars authorized by the infrastructure act,” Branch adds. “While the overall trend in construction starts is positive, the very aggressive stance taken by the Federal Reserve to combat inflation risks slowing the momentum in construction.”

Nonbuilding construction

Nonbuilding construction fell 2 percent in May to a seasonally adjusted annual rate of $182.2 billion.

Highway and bridge starts showed marginal growth in the month, while utility and gas plant starts jumped 22 percent. The drag on growth came from environmental public works starts, which fell 14 percent in May, and miscellaneous nonbuilding starts, which lost 3 percent.

Through the first five months of the year, total nonbuilding starts were 5 percent lower than in the same time period in 2021. Highway and bridge starts gained 22 percent year-to-date and environmental public works projects were 2 percent higher. At the same time, miscellaneous nonbuilding and utility/gas plants starts dropped 35 percent and 41 percent, respectively, through five months.

For the 12 months ending May 2022, total nonbuilding starts were 3 percent lower than the 12 months ending May 2021. Environmental public works starts were up 9 percent in that time, and street/bridge starts gained 7 percent. Miscellaneous nonbuilding starts were 33 percent lower in that time and utility/gas plant starts were down 15 percent.

The largest nonbuilding projects to break ground in May were the $1.6 billion Samson Solar Energy Center in Franklin, Lamar and Red River Counties, Texas, the $523 million Danish Fields Solar Farm and Battery Storage in Matagorda County, Texas, and the $307 million widening of highway 10 in Beaumont, Texas.

Nonresidential construction

Nonresidential building starts rose 20 percent in May to a seasonally adjusted annual rate of $355.1 billion.

In May, commercial starts rose 35 percent due to a large gain in office starts. Institutional starts rose 9 percent and manufacturing starts fell 5 percent in the month.

Through the first five months of 2022, nonresidential building starts were 17 percent higher than the first five months of 2021. Commercial starts advanced 17 percent and institutional starts rose 2 percent year-to-date, while manufacturing starts were 97 percent higher in that time.

For the 12 months ending May 2022, nonresidential building starts were 20 percent higher than the 12 months ending May 2021. Commercial starts grew 18 percent, institutional starts rose 9 percent, and manufacturing starts swelled 116 percent on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in May were the $950 million Meta Hyperscale data center in Temple, Texas, the $940 million Digital Dulles data center in Dulles, Virginia and a $540 million mixed-use building in New York.

Residential construction

Residential building starts fell 4 percent in May to a seasonally adjusted annual rate of $442.2 billion. Single family starts dropped 10 percent and multifamily starts rose 8 percent in the month.

Through the first five months of 2022, residential starts were 3 percent higher than the first five months of 2021. Multifamily starts were up 21 percent, while single family housing slipped 3 percent.

For the 12 months ending May 2022, residential starts improved 8 percent from the same period ending May 2021. Single family starts were 2 percent higher and multifamily starts were up 27 percent on a 12-month rolling sum basis.

The largest multifamily structures to break ground in May were the $800 million Two Bridges building in New York, the $329 million Reston Next residential building in Reston, Virginia and the $294 million 500 Main Street residential building in New Rochelle, New York.

Regionally, total construction starts in May rose in the Northeast, Midwest and South Central regions, but fell in the South Atlantic and West.