Report: Construction starts down in August

Total construction starts fell 9 percent in August to a seasonally adjusted annual rate of $1.25 trillion, according to Dodge Construction Network.

The decline, however, comes on the heels of a massive increase in July that saw the start of three large manufacturing plants and two LNG export facilities. Nonresidential building starts rose 7 percent in August and residential starts were 1 percent higher, while nonbuilding starts lost 36 percent in the month.

Year-to-date, total construction was 16 percent higher in the first eight months of 2022 compared to the same period in 2021. Between January and August, nonresidential building starts rose 35 percent, residential starts were 1 percent higher and nonbuilding starts were up 21 percent in that time.

For the 12 months ending August 2022, total construction starts were 15 percent above the 12 months ending August 2021. Nonresidential starts were 33 percent higher, residential starts gained 4 percent and nonbuilding starts were up 15 percent year-over-year.

“While construction starts activity continues to be dominated by mega-projects like chip fabrication plants, the middle and lower end of the value spectrum is holding up well,” says Richard Branch, chief economist for Dodge Construction Network. “This is a sign that organic growth in the construction sector has not yet been undermined by the concern of a potential recession in 2023. While higher interest rates may undo this support in the coming months, the industry is in a very good position to continue modest growth.”

Nonbuilding construction

Nonbuilding construction starts fell 36 percent in August to a seasonally adjusted annual rate of $278.8 billion. This decline follows a July that saw the start of two multi-billion-dollar LNG export plants. If these projects were excluded from July, August’s nonbuilding starts would have increased 27 percent.

In August, highway and bridge starts increased 21 percent, environmental public works increased 39 percent and miscellaneous nonbuilding starts dropped 9 percent.

Through the first eight months of the year, total nonbuilding starts were 21 percent higher than the same period in 2021. Utility and gas plant starts gained 57 percent January to August, highway and bridge starts were 21 percent higher and environmental public works were 14 percent higher year-to-date. Miscellaneous nonbuilding starts, by contrast, were down 14 percent in that time.

For the 12 months ending August 2022, total nonbuilding starts were 15 percent higher than the 12 months ending August 2021. Utility and gas plant starts were 46 percent higher, highway and bridge starts rose 11 percent and environmental public works increased by 15 percent year-over-year. In that time, miscellaneous nonbuilding starts decreased by 14 percent.

The largest nonbuilding projects to break ground in August were the $1.9 billion third phase of the New Soo Lock Chamber in Sault Ste Marie, Michigan, a $738 million paving project in Honolulu and the $460 million first phase of the Sand Island wastewater treatment plant in Honolulu.

Dodge Construction Network reports that nonresidential construction is up 7 percent in August and up 35 percent year-to-date. Photo: ablokhin/iStock / Getty Images Plus/Getty Images

Nonresidential construction

Nonresidential building starts moved 7 percent higher in August to a seasonally adjusted annual rate of $569.6 billion. August’s gain comes after an increase in July that saw several large manufacturing projects begin building. Supporting the August gain were an airport terminal, a chip fabrication facility and a large hotel and entertainment complex.

Commercial starts were 22 percent higher in August, with all categories posting an increase. Institutional starts were up 62 percent, despite education and healthcare starts declining, and manufacturing starts lost 42 percent during the month.

Through the first eight months of 2022, nonresidential building starts were 35 percent higher than the same time in 2021. Commercial starts grew 17 percent and institutional starts rose 18 percent, while manufacturing starts were 231 percent higher year-to-date.

For the 12 months ending August 2022, nonresidential building starts were 33 percent higher than the 12 months ending August 2021. Commercial and institutional each increased 17 percent and manufacturing starts rose 224 percent on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in August were the $9.5 billion New Terminal One at JFK airport in Jamacia, New York, the $8.5 billion Samsung chip fabrication plant in Taylor, Texas, and the $1.1 billion Gaylord Pacific Hotel & Convention Center in Chula Vista, California.

Residential construction

Residential building starts rose 1 percent in August to a seasonally adjusted annual rate of $400.7 billion. Single family starts lost 10 percent, while multifamily starts gained 19 percent.

Through the first eight months of 2022, residential starts were up 1 percent compared to the same timeframe in 2021. Multifamily starts increased 28 percent, while single family housing slipped 8 percent.

For the 12 months ending August 2022, residential starts increased 4 percent from the same period ending August 2021. Single family starts were 6 percent lower, while multifamily starts were 33 percent stronger on a 12-month rolling sum basis.

The largest multifamily structures to break ground in August were the $700 million Aria Reserve residential tower in Miami, the $500 million 30 Van Ness mixed-use tower in San Francisco, and the $500 million 42-02 Orchard Street mixed-use tower in Long Island City, New York.

Regionally, total construction starts in August rose in the Northeast, South Atlantic and West, but fell in the Midwest and South Central.