Dodge Data: Total construction starts decline further

Total construction starts fell 9 percent in August to a seasonally adjusted annual rate of $782.8 billion, according to Dodge Data & Analytics.

All three sectors Dodge Data tracks lost ground in August. Nonbuilding starts were down 2 percent, residential starts were 9 percent lower and nonresidential building starts fell 13 percent.

“Construction starts have hit a rough patch following the euphoria seen in the early stages of recovery from the pandemic,” says Richard Branch, chief economist at Dodge Data. “The delta variant has raised concern that the fledgling economic recovery is stalling out, undermining the already low level of demand for most types of nonresidential buildings.

“Additionally, significant price increases for construction materials, logistic constraints and labor shortages are making a challenging situation worse,” Branch adds. “Construction starts are likely to remain unsteady over the next few months. However, the dollar value of projects entering planning continues to suggest that the recovery in construction starts should resume early in the new year.”

Nonbuilding construction

Nonbuilding construction starts lost 2 percent in August to a seasonally adjusted annual rate of $167.8 billion.

Starts in the environmental public works category (i.e., water-related projects) gained 4 percent, while miscellaneous nonbuilding starts (i.e., heavily pipelines) were up 14 percent. Highway and bridge starts, meanwhile, were 4 percent lower, and utility and gas plants dropped 21 percent following a sizable gain in July.

On the year, total nonbuilding starts were up 1 percent through August. Environmental public works were up 23 percent, and utility/gas plant starts were up less than one percentage point through August. Starts in the highway and bridge (down 2 percent) and miscellaneous nonbuilding sectors (down 19 percent) were down through the first eight months of the year.

For the 12 months ending in August 2021, total nonbuilding starts were 2 percent lower than the 12 months ending in August 2020. Environmental public works starts were 22 percent higher, and highway and bridge starts were up 3 percent. Utility and gas plant starts were down 17 percent, and miscellaneous nonbuilding starts were 22 percent lower on a 12-month rolling basis.

The largest nonbuilding projects to break ground in August were the $677 million Oak Hill Parkway roadway in Austin, Texas, the $351 million southern expansion of the Kansas City Streetcar system in Kansas City, Missouri, and the $300 million first phase of the Dunns Bridge Solar Project in Wheatfield Township, Indiana.

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