Dodge Data: November a mixed month for construction starts

Total construction starts fell 2 percent in November to a seasonally adjusted annual rate of $797.5 billion following a strong gain in October, Dodge Data & Analytics reports.

Residential starts fell 7 percent during the month, Dodge Data says, while nonbuilding starts dropped 14 percent. Nonresidential building construction starts, however, rose 19 percent in November. Total construction starts fell in three regions: the South Atlantic, West and Northeast. They rose in two, though: the Midwest and South Central.

Through 11 months of 2020, total construction starts were down 12 percent from the same period of 2019. Nonresidential starts were 25 percent lower, while nonbuilding starts were down 16 percent. Residential starts, by contrast, were 3 percent higher through 11 months.

In November, the Dodge Index fell 2 percent to 169 from the 173 October reading. The Dodge Index was down 24 percent from a year earlier and 6 percent lower than its pre-pandemic level in February.

“November construction starts were somewhat of a mixed bag,” says Richard Branch, chief economist at Dodge Data. “On the positive side, the gain in nonresidential building starts shows that the recovery from the early months of the pandemic remains on course. If not for the start of a very large bridge and tunnel project in October, nonbuilding starts would actually have posted a tepid gain in November.”

Despite the November decline in single-family starts, Branch says tremendous positive momentum remains in the housing sector.

“There remains significant concern, however, about the ability of construction starts to maintain their current pace in the face of rising COVID-19 cases, the uncertain outlook for additional federal stimulus, and the lack of agreement on funding the federal government past Dec. 18,” Branch says. “While the near-term outlook for starts remains cloudy, the recent deployment of a vaccine in the U.S. raises hope and expectation that 2021 will be a better year.”

Nonbuilding

Nonbuilding construction tumbled in November, dropping 14 percent to a seasonally adjusted annual rate of $191.8 billion.

November’s decline was mainly a response to the October start of the $3.6 billion Hampton Roads Bridge & Tunnel project. November’s level of nonbuilding construction starts was actually higher than the monthly dollar value of starts during the July-through-September period, Dodge Data says.

In November, environmental public works rose 48 percent while miscellaneous nonbuilding gained 61 percent. Starts for highways and bridges, however, fell 26 percent while the utility/gas plant category lost 59 percent.

The largest nonbuilding project to break ground in November was the $948 million Capline Marathon Pipeline, which is a 632-mile system that extends from Patoka, Illinois, to St. James, Louisiana. Also starting in November was the $865 million I-275 Howard Frankland Bridge in Tampa Bay, Florida, and the $524 million Northwest Water Treatment Facility in Wichita, Kansas.

Through the first 11 months of the year, total nonbuilding starts were down 16 percent from the same period of 2019. Starts in the highway and bridge category were up 7 percent, while environmental public works were 6 percent lower. The miscellaneous nonbuilding category was down 31 percent on a year-to-date basis, while the utility/gas plant category was 45 percent lower.

Nonresidential

Nonresidential building starts moved 19 percent higher in November to a seasonally adjusted annual rate of $249.7 billion. The commercial sector increased 27 percent as two large office projects got underway.

Gains were also seen in the hotel, warehouse, and parking structures categories. Institutional construction starts increased 17 percent over the month due to gains in health care and education. Manufacturing starts, meanwhile, fell 29 percent in November.

The largest nonresidential building project to get started in November was the $1.3 billion One Madison Avenue office project in New York. Also starting was the $940 million Richard Boulevard Office Complex in Sacramento, California, and the $615 million Baptist Healthcare Hospital in Pensacola, Florida.

Through the first 11 months of 2020, total nonresidential building starts were down 25 percent. Commercial starts were 26 percent lower, while institutional starts were down 15 percent, and manufacturing starts were 63 percent lower.

Residential

Residential building starts dropped 7 percent in November to a seasonally adjusted annual rate of $356.1 billion. Single-family starts fell 5 percent over the month, and multifamily starts slipped 14 percent.

The largest multifamily building to break ground in November was the $175 million Simone Residential Tower in San Diego. Also starting in November were the $123 million Scotts Run apartments in Tysons, Virginia, and the $103 million Hanover Wellesley Residential building in Wellesley, Massachusetts.

Through the first 11 months of 2020, residential construction starts were 3 percent higher than the same time period in 2019. Single-family starts were up a healthy 10%, but multifamily starts were down 13 percent.