Dodge: Total construction starts down in September

Total construction starts decreased 19 percent in September to a seasonally adjusted annual rate of $1.02 trillion, according to Dodge Construction Network.

In September, nonresidential building starts dropped 23 percent, residential starts fell 11 percent and nonbuilding starts declined 25 percent. Year-to-date, total construction was 16 percent higher in the first nine months of 2022 than the same period in 2021. Nonresidential building starts rose 37 percent from January to September 2022, residential starts were flat in that time and nonbuilding starts were up 20 percent.

For the 12 months ending September 2022, total construction starts were 15 percent above the 12 months ending September 2021. Nonresidential starts were 34 percent higher in that time, residential starts gained 2 percent and nonbuilding starts were up 17 percent.

“September’s decline in construction starts should not be seen as a precursor to a cyclical pullback in the industry,” says Richard Branch, chief economist at Dodge Construction Network. “The previous two months saw the start of several megaprojects, and the decline in September returns starts activity to its trend level. It is likely, however, that as interest rates move higher in the coming months, marginal construction projects may not get underway and construction activity will begin to settle back.”

Nonbuilding construction

Nonbuilding construction starts fell 25 percent in September to a seasonally adjusted annual rate of $213.1 billion.

Highway and bridge starts fell 31 percent for the month and environmental public works starts dropped 38 percent. On the positive side, gas and utility starts rose 8 percent and miscellaneous nonbuilding starts increased 17 percent.

Year-to-date, total nonbuilding starts were 20 percent higher than in 2021. Utility and gas plant starts gained 62 percent through the first nine months, highway and bridge starts were 20 percent higher and environmental public works were 13 percent higher. Miscellaneous nonbuilding starts, by contrast, were down 10 percent through the first nine months.

For the 12 months ending September 2022, total nonbuilding starts were 17 percent higher than the 12 months ending September 2021. Utility and gas plant starts were 61 percent higher, highway and bridge starts rose 11 percent and environmental public works starts increased 13 percent. Miscellaneous nonbuilding starts decreased 14 percent.

The largest nonbuilding projects to break ground in September were the $302 million Sunflower Wind Farm in Fairplay, Kansas, the $267 million Orinda waste treatment plant in Oakland, California, and the $246 million Cattlemen Solar Park in Milam County, Texas.

Nonresidential construction

Nonresidential building starts dropped 23 percent in September to a seasonally adjusted annual rate of $438.8 billion.

In September, commercial starts inched 2 percent higher, led by office and warehouse starts, while institutional starts lost 39 percent despite solid growth in the education category. Manufacturing starts were 22 percent lower in September.

Through the first nine months of 2022, nonresidential building starts were 37 percent higher than the first nine months last year. Both commercial starts and institutional starts grew 19 percent year-to-date.

For the 12 months ending September 2022, nonresidential building starts were 34 percent higher than the previous 12 months. Commercial starts grew 16 percent, institutional starts rose 18 percent and manufacturing starts rose 240 percent on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in September were the $5.7 billion oil platforms in the Gulf of Mexico, the $2.9 billion Metro-North Penn Station Project in New York and the $800 million Meta data center in Kuna, Idaho.

Residential construction

Residential building starts fell 11 percent in September to a seasonally adjusted annual rate of $369.5 billion.

Single family starts lost 7 percent, while multifamily starts dropped 16 percent.

Through the first nine months of 2022, residential starts were flat when compared to the same time in 2021. Multifamily starts were up 25 percent, while single family housing slipped 9 percent.

For the 12 months ending September 2022, residential starts improved 2 percent from the same period ending September 2021. Single family starts were 7 percent lower, while multifamily starts were up 27 percent on a 12-month rolling sum basis.

The largest multifamily structures to break ground in September were the $1 billion AEG Nashville Yards mixed-use project in Nashville, Tennessee, the $300 million Sterling Okan building in Miami and the $230 million Majestic mixed-use project in Gowanus, New York.