Nonbuilding, residential gains drive construction starts upward in July

The start of a $12 billion LNG facility in Texas bolstered total construction starts in July. Photo: ablokhin/iStock / Getty Images Plus/Getty Images

Total construction starts rose 17 percent in July to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network.

Nonbuilding starts drove the increase, up 38 percent in the month due to the start of a singular large LNG facility. Residential starts rose 20 percent, while nonresidential building starts lost 6 percent in July.

Year-to-date through July 2023, total construction starts were 7 percent below a year earlier. Residential and nonresidential starts were down 21 percent and 7 percent respectively in that time. Nonbuilding starts, however, were up 20 percent on a year-to-date basis.

For the 12 months ending July 2023, total construction starts were 3 percent higher than that of 2022. Nonbuilding starts were 21 percent higher and nonresidential building starts gained 16 percent from August 2022 to July 2023. Conversely, on a 12-month rolling basis, residential starts posted a 17 percent decline overall.

“Construction starts have plateaued and are making little headway,” says Richard Branch, chief economist at Dodge Construction Network. “Higher interest rates, labor shortages and material prices continue to impact the flow of construction starts ­– resulting in little forward momentum over the last 12 months. The lag in nonresidential building projects entering the planning stage will slow starts as the year progresses, which should be offset by rising infrastructure activity.

Nonbuilding starts

Nonbuilding construction starts surged in July, climbing 38 percent to a seasonally adjusted annual rate of $440 billion. Without the start of the large LNG facility included, total nonbuilding starts would have dropped 7 percent.

Environmental public works also rose dramatically, increasing 62 percent due to the start of a large dock facility, while highway and bridge starts fell 4 percent in the month. Miscellaneous nonbuilding starts decreased 71 percent in July following the start of the Buffalo Bills’ new stadium in June.

Year to date through July, nonbuilding starts gained 20 percent. Utility/gas plants rose 23 percent and miscellaneous nonbuilding starts were up 37 percent year to date. Highway and bridge starts gained 14 percent, along with environmental public works – which was up 19 percent over the first seven months.

For the 12 months ending July 2023, total nonbuilding starts were 21 percent higher than the 12 months ending July 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 9 percent and 32 percent in that time, respectively. Highway and bridge starts were up 22 percent and environmental public works rose 25 percent on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in July were the $12 billion first phase of the Rio Grande LNG facility in Brownsville, Texas, a $2.8 billion concrete dock at the Pearl Harbor Naval Shipyard in Hawaii and the $813 million first phase of the Bellefield Solar farm and battery facility in California City, California.

Nonresidential starts

Nonresidential building starts fell 6 percent in July to a seasonally adjusted annual rate of $334 billion.

Commercial starts rose 11 percent thanks to gains in warehouse and parking starts, offsetting a decline in office and hotel starts. Institutional starts were down 11 percent with education, dormitories and religious the only categories to show increases. Manufacturing starts dropped 39 percent in July.

On a year-to-date basis through July, total nonresidential starts were 7 percent lower than that of 2022. Institutional starts gained 8 percent, while manufacturing and commercial starts fell 9 percent and 31 percent, respectively.

For the 12 months ending July 2023, total nonresidential building starts were 16 percent higher than that ending July 2022. Manufacturing starts were 24 percent higher in that time, institutional starts improved 20 percent and commercial starts gained 8 percent.

The largest nonresidential building projects to break ground in July were the $405 million Envision AESC BMW components manufacturing plant in Florence, South Carolina, the $370 million Wisteria at Warner Center office building in Los Angeles and the $277 million first phase of an airside concourse at Orlando International Airport in Florida.

Residential starts

Residential building starts rose 20 percent in July to a seasonally adjusted annual rate of $414 billion.

Single family starts gained 2 percent, while multifamily starts shot 62 percent higher in the month.

On a year-to-date basis through July 2023, total residential starts were down 21 percent compared to the first seven months of 2022. Single family starts were 25 percent lower and multifamily starts were down 14 percent.

For the 12 months ending in July 2023, residential starts were 17 percent lower than in 2022. Single family starts were 25 percent lower while multifamily starts were down 0.1 percent on a rolling 12-month basis.

The largest multifamily structures to break ground in July were the $1 billion Clarkson Square condo and apartment building in New York City, the $365 million Queensbridge Collective residential tower in Charlotte, North Carolina, and the $358 million Oasis Hallandale tower in Hallandale Beach, Florida.

Related: Dodge Momentum Index dips in July