June construction starts fall 7 percent

New construction starts in June decreased 7 percent from May to a seasonally adjusted annual rate of $595.1 billion, according to Dodge Data & Analytics. This also lowered the Dodge Index to 126 compared to 135 in May.

“The construction start statistics on a monthly basis continue to show an up-and-down pattern,” says Robert Murray, chief economist at Dodge Data & Analytics. “This has often been due to the presence or absence of very large projects for a given month, which most recently applies to the May and June behavior for public works and electric utilities.”

Nonbuilding construction in June fell 24 percent to $145.7 billion, contributing greatly to the June construction starts reduction. The public works categories fell 27 percent, with sewer construction falling 13 percent and water supply systems falling 29 percent. In addition, river and harbor development increased 13 percent in June; highway and bridge construction edged up 2 percent; and the electric utility and gas plant category fell 18 percent.

Residential building decreased 2 percent in June to $268.6 billion. Single-family housing fell 1 percent, and multifamily housing retreated 5 percent. According to Dodge Data, New York City continued to be the leading metropolitan area in terms of the dollar amount of multifamily starts through the first six months of 2016, followed by Los Angeles, Miami, Chicago and Boston.

Nonresidential building in June grew 6 percent to $180.8 billion. The commercial categories as a group rose 9 percent, with hotel construction advancing 36 percent and office construction rising 19 percent. Despite this, store construction fell 4 percent and warehouse construction fell 17 percent.

The institutional side of the nonresidential building market increased 7 percent in June, with healthcare facilities climbing 22 percent, educational facilities rising 1 percent and the transportation terminal category jumping 95 percent. In addition, public buildings were down 4 percent, churches were down 18 percent and amusement-related projects were down 23 percent.

According to Dodge Data, the 11 percent drop for total construction starts on an unadjusted basis from January through June of 2016 reflected reduced activity for both nonbuilding construction and nonresidential building, relative to their elevated pace one year ago.

“Over a broader time frame, the year-to-date comparisons during the first half of 2016 were skewed by a number of exceptionally large projects (defined as projects valued at $1 billion or more) that reached the construction start stage in last year’s first half,” Murray says. “There were fewer such projects during the second half of 2015, which should help the year-to-date comparisons as 2016 proceeds.”