Total construction starts lost 19 percent in June, falling to a seasonally adjusted annual rate of $1 trillion, according to Dodge Construction Network.
Dodge Construction Network says much of the decline was due to a stark drop in utility/gas starts following a strong May that had several mega projects get underway.
In June, Dodge Construction Network reports nonbuilding starts fell 46 percent – following a 49 percent gain in May – while nonresidential starts fell 13 percent. Residential starts rose 9 percent during the month.
On a year-to-date basis through June, total construction starts are up 7 percent from the first six months of 2023. Residential starts are up 14 percent, while nonbuilding starts gained 8 percent. Nonresidential building starts are up 1 percent.
“The construction market remains sluggish as high interest rates continue to reverberate through the sector,” says Richard Branch, chief economist of Dodge Construction Network. “However, the Dodge Momentum Index, which tracks nonresidential building projects entering the planning phase, has been reasonably steady over the last year, indicating that owners and developers remain cautiously optimistic that the conditions will be more conducive to construction in the future.
“But moribund starts activity means that these projects are piling up like water behind a dam,” Branch adds. “Lower rates in 2024 will allow these projects to start flowing again, resulting in a quicker pace of activity towards year-end.”
Nonbuilding
Nonbuilding construction starts fell 46 percent from May to June to a seasonally adjusted annual rate of $251 billion.
The drop follows a large increase in May when both an LNG plant and an offshore wind project got underway. As a result of that payback, gas/utility plants fell 90 percent over the month, while environmental public works lost 4 percent.
Highway and bridge starts gained 5 percent in June, and miscellaneous nonbuilding starts rose 28 percent.
On a year-to-date basis through June, total nonbuilding starts are 8 percent higher. Environmental public works starts are up 20 percent, gas/utility starts are up 16 percent, and highway and bridge starts rose 1 percent. Miscellaneous nonbuilding starts are down 2 percent through June.
According to Dodge Construction Network, the largest nonbuilding projects to break ground in June were the $510 million Airo Ivy City Yard rail improvements in Washington, D.C., the $400 million Cadillac El Dorado Solar facility in Callahan County, Texas, and the $400 million replacement of the Belmont Park racing facility in Elmont, New York.
Nonresidential
Nonresidential building starts lost 13 percent in June to a seasonally adjusted annual rate of $359 billion.
Manufacturing starts tumbled 34 percent, while institutional starts retreated 19 percent. Commercial starts rose 4 percent in June due to an increase in office and data center activity, as well as increased retail starts.
On a year-to-date basis through June, total nonresidential starts are up 1 percent. Institutional starts are 11 percent higher, while commercial starts are down 3 percent. Manufacturing starts are 19 percent lower on a year-to-date basis through June.
According to Dodge Construction Network, the largest nonresidential building projects to break ground in June were the $1.5 billion QTS Albany 1 and 2 data centers in New Albany, Ohio, the $550 million First Solar manufacturing plant in New Iberia, Louisiana, and the $520 million TGH Taneja Tower Surgical building in Tampa, Florida.
Residential
Residential building starts moved 9 percent higher in June to a seasonally adjusted annual rate of $396 billion.
Multifamily starts rose 23 percent, while single-family starts gained 4 percent.
On a year-to-date basis through six months, total residential starts are 14 percent higher. Single-family starts improved 25 percent, and multifamily starts are 6 percent lower on a year-to-date basis.
According to Dodge Construction Network, the largest multifamily structures to break ground in June were the $1 billion Bentley Residences in Sunny Isles Beach, Florida, the $600 million Cipriani Residences in Miami, and the $434 million The Marketplace apartments in Irvine, California.
