Growth in select sectors offers a counterpoint to April’s slowdown. 

BOSTON, MA — May 21, 2025 — Total construction starts were down 9% in April to a seasonally adjusted annual rate of $1.03 trillion, according to Dodge Construction Network. Nonresidential building starts declined 3%, residential starts fell 4%, while nonbuilding starts decreased 22%. On a year-to-date basis through April, total construction starts were down 3% from last year. Nonresidential starts were down 10%, residential starts were down 5%, and nonbuilding starts were up by 8% over the same period. 

For the 12 months ending April 2025, total construction starts were up 2% from the 12 months ending April 2024. Residential starts were flat, nonresidential starts were up 1%, and nonbuilding starts rose 5% over the same period.  

“Broad-based monthly declines in construction starts represent a troubling signal for the sector,” stated Eric Gaus, chief economist at Dodge Construction Network. “While not definitive, the slowdown in April aligns with delays in the planning pipeline and other economic data that capture the volatility and uncertainty of all the April tariff announcements. Uncertainty around trade policy and the economy’s direction will continue to weigh on construction activity in the coming months.” 

Nonbuilding

Nonbuilding construction starts fell 22% in April to a seasonally adjusted annual rate of $279 billion. Highway and bridge starts decreased 8%, environmental public works fell back 2%, and utility starts were down 70% last month. Meanwhile, miscellaneous nonbuilding starts were up a strong 57% in April. On a year-to-date basis through April, nonbuilding starts were up 8%, with utility/gas starts up 37%, miscellaneous nonbuilding up 5%, highway and bridge starts up 7%, and environmental public work starts down 7% over the same period.  

For the 12 months ending April 2025, total nonbuilding starts were up 5%. Environmental public works improved 13% compared to the 12 months ending April 2024. Highway and bridge starts were up 4%, miscellaneous nonbuilding starts were up 16%, and utility/gas starts were down 6% over the same period.   

The largest nonbuilding projects to break ground in April were the $1.8 billion Hudson Tunnel Project (Manhattan Tunnel) in New York, New York, the $775 million West Alabama Highway project in Thomasville, Alabama, and the $365 million Carpenter Wind farm (200 MW) in Carpenter Township, Indiana.  

Nonresidential 

Nonresidential building starts receded 3% in April to a seasonally adjusted annual rate of $391 billion. Commercial starts were 21% lower in April, alongside weaker retail, office, and warehouse starts. Institutional starts, on the other hand, were up 2% last month following stronger healthcare and education starts. Manufacturing starts grew 78% over the month, as well. On a year-to-date basis through April, nonresidential starts are down 10% compared to April 2024. Commercial starts are up 3% and institutional starts are down 4% over the same period.  

For the 12 months ending April 2025, total nonresidential starts were up 1% compared to the 12 months ending April 2024. Commercial starts were up 12%, institutional starts improved 9%, and manufacturing starts were down 46% over the same period.  

The largest nonresidential building projects to break ground in April were the $1 billion Kaiser Permanente Medical Center in Sacramento, California, the $940 million Bally’s River West Hotel and Casino in Chicago, Illinois and two buildings for the GM & Samsung SDI Battery Cell Factory in New Carlisle, Indiana – valued at $855 million and $875 million respectively.  

Residential 

Residential building starts fell 4% in April to a seasonally adjusted annual rate of $360 billion. Single-family starts decreased by 5%, while multifamily starts receded 3%. On a year-to-date basis through April, residential starts are down 5%, with single-family starts down 6% and multifamily starts down 4%.  

For the 12 months ending April 2025, total residential starts were flat. Single-family starts were up 3% and multifamily starts were down 7% compared to the 12 months ending April 2024.  

The largest multifamily structures to break ground in April were a $331 million residential and retail development in Jersey City, New Jersey, the $256 million Vista Point apartments at Fairview Life Care Community in Groton, Connecticut, and the $226 million Rambler Riverfront District apartments in West Lafayette, Indiana.  

Regionally, total construction starts in April rose in the Midwest, and declined in the Northeast, South Atlantic, South Central, and West.

The post Construction Starts Declined 9% in April appeared first on Dodge Construction Network.

Nonresidential and nonbuilding activity drove growth.

BOSTON, MA — April 21, 2025 — Total construction starts were up 3% in March to a seasonally adjusted annual rate of $1.1 trillion, according to Dodge Construction Network. Nonresidential building starts grew 6%, residential starts decreased 5%, while nonbuilding starts increased 9%. On a year-to-date basis through March, total construction starts were down 1% from last year. Nonresidential starts were down 9%, residential starts were down 5%, and nonbuilding starts were up by 16% over the same period. 

For the 12 months ending March 2025, total construction starts were up 4% from the 12 months ending March 2024. Residential starts were up 2%, nonresidential starts were up 3%, and nonbuilding starts rose 8% over the same period.  

“Construction activity grew over the month, but sector-specific data continued to show mixed trends,” stated Eric Gaus, chief economist at Dodge Construction Network. “Looking ahead, growing uncertainty around trade policy and the direction of the economy will likely weigh on construction activity. Rising delays in the planning pipeline suggest that developers are already bracing for impact, grappling with higher tariffs, dwindling federal funding, and ongoing labor shortages. We expect headwinds to grow as long as the uncertainty remains.” 

Nonbuilding

Nonbuilding construction starts grew 9% in March to a seasonally adjusted annual rate of $361 billion. Highway and bridge starts decreased 10%, environmental public works fell back 26%, and miscellaneous nonbuilding starts were down 23% last month. Meanwhile, utility/gas starts were up a strong 159% in March. On a year-to-date basis through March, nonbuilding starts were up 16% in March, with utility/gas starts up 66%, miscellaneous nonbuilding down 5%, highway and bridge starts up 13%, and environmental public work starts up 1% over the same period.  

For the 12 months ending March 2025, total nonbuilding starts were up 8%. Environmental public works led the way, improving 19% compared to the 12 months ending March 2024. Highway and bridge starts were up 6%, miscellaneous nonbuilding starts were up 17%, and utility/gas starts were down 5% over the same period.   

The largest nonbuilding projects to break ground in March were the $3.5 billion Sunrise Offshore Wind Farm (924 MW) in Montauk, New York, the $2.1 billion Greenlink West Transmission Line in Yerrington, Nevada, and the $756 million Rail Tie Wind project in Tie Siding, Wyoming.  

Nonresidential 

Nonresidential building starts improved 6% in March to a seasonally adjusted annual rate of $403 billion. Commercial starts were 21% higher in March, alongside stronger retail, office and warehouse starts. Institutional starts, on the other hand, were down 12% in March following weaker dormitory, government building, and transportation starts. Manufacturing starts grew 122% over the month. On a year-to-date basis through March, nonresidential starts are down 9% compared to March 2024. Commercial and institutional starts are up 3% over the same period.  

For the 12 months ending March 2025, total nonresidential starts were up 3% compared to the 12 months ending March 2024. Commercial starts were up 11%, institutional starts improved 15%, and manufacturing starts were down 44% over the same period.  

The largest nonresidential building projects to break ground in March were the $1 billion Johnson & Johnson Biologics Manufacturing Facility in Wilson, North Carolina, the $800 million Capital One Arena Modernization in Washington, D.C., and the $750 million Amazon Robotics Fulfillment Center in Wilmington, North Carolina.  

Residential 

Residential building starts fell 5% in March to a seasonally adjusted annual rate of $377 billion. Single-family starts decreased by 10%, while multifamily starts increased by 4%. On a year-to-date basis through March, residential starts are down 5% when compared to March 2024, with single-family starts down 4% and multifamily starts down 6%.  

For the 12 months ending March 2025, total residential starts were up 2%. Single-family starts were up 7% and multifamily starts were down 8% compared to the 12 months ending March 2024.  

The largest multifamily structures to break ground in March were the $1 billion Four Seasons Private Residences Las Vegas in Henderson, Nevada, the $357 million Flatiron Building Condominiums in New York, NY, and the $276 million The Villa Miami Condominiums in Miami, Florida.   

Regionally, total construction starts in March rose in the Northeast, South Centra,l and West, remained flat in the Midwest, and declined in the South Atlantic.

The post Construction Starts Improved 3% in March appeared first on Dodge Construction Network.

Growth in some sectors offset weakness in others.

BOSTON, MA — March 24, 2025 — Total construction starts were up 0.5% in February to a seasonally adjusted annual rate of $1.1 trillion, according to Dodge Construction Network. Nonresidential building starts grew 2%, residential starts decreased 1%, while nonbuilding starts were unchanged. On a year-to-date basis through February, total construction starts were down 2% from last year. Nonresidential starts were down 14%, residential starts were down 3% and nonbuilding starts were up by 16% over the same period. 

For the 12 months ending February 2025, total construction starts were up 3% from the 12 months ending February 2024. Residential starts were up 3%, nonresidential starts were flat, and nonbuilding starts rose 7% over the same period.  

“While increased uncertainty over the trajectory of monetary and fiscal policies may be informing some of the flat month-to-month trends – the largest construction sectors still saw growth in activity throughout February,” stated Sarah Martin, associate director of forecasting at Dodge Construction Network. “Steady growth in planning activity throughout 2024 should support stronger construction starts in future months – but owners and developers will have to factor in higher risk around elevated material costs, supply chain volatility and further labor constraints.” 

Nonbuilding 

Nonbuilding construction starts were flat in February at a seasonally adjusted annual rate of $334 billion. Highway and bridge starts and environmental public works both increased 8% but utility/gas starts were down 21% and miscellaneous nonbuilding starts receded 10% over the month. On a year-to-date basis through February, nonbuilding starts were up 16% in February – with utility/gas starts up 68%, miscellaneous nonbuilding down 5%, highway and bridge starts up 20%, and environmental public work starts up 1% over the same period.  

For the 12 months ending February 2025, total nonbuilding starts were up 7%. Environmental public works led the way, improving 18% compared to the 12 months ending February 2024. Highway and bridge starts were up 7%, miscellaneous nonbuilding starts were up 16% and utility/gas starts were down 7% over the same period.  

The largest nonbuilding projects to break ground in February were the $1.4 billion road work on the Westshore Interchange in Tampa, Florida, the $1.1 billion Kensico-Eastview Connection Tunnel and Shafts in Valhalla, New York and the $1.0 billion Aratina Solar farm in Boron, California.  

Nonresidential 

Nonresidential building starts improved 2% in February to a seasonally adjusted annual rate of $402 billion. Commercial starts were 22% higher in February, alongside strong office, hotel, and parking garage starts. Institutional starts, on the other hand, were down 2% in February following weaker healthcare activity after a multi-billion-dollar hospital started in January. Manufacturing starts fell 48% over the month. On a year-to-date basis through February, nonresidential starts are down 14% compared to February 2024. Commercial starts are down 8% and institutional starts are up 11% over the same period.  

For the 12 months ending February 2025, total nonresidential starts were flat compared to the 12 months ending February 2024. Commercial starts were up 7%, institutional starts improved 15%, and manufacturing starts were down 51% over the same period.  

The largest nonresidential building projects to break ground in February were the $1.8 billion terminal at John Glenn Columbus Airport in Columbus, Ohio, the $1.5 billion Lyndon B. Johnson Hospital replacement in Houston, Texas and the $1.45 billion renovations to the Jacksonville Jaguars EverBank Stadium in Jacksonville, Florida.  

Residential 

Residential building starts fell 1% in February to a seasonally adjusted annual rate of $401 billion. Single family starts increased by 1%, while multifamily starts fell back 6%. On a year-to-date basis through February, residential starts are down 3% when compared to February 2024 – with single family starts up 2% and multifamily starts down 11%.  

For the 12 months ending February 2025, total residential starts were up 3% – while single family starts were up 11% and multifamily starts were down 11% compared to the 12 months ending February 2024.  

The largest multifamily structures to break ground in February were the $478 million condominiums at The Residences at 1428 Brickell in Miami, Florida, the $335 million Highbridge Apartment Building in Highbridge, New York and the $265 million Tower 2 at The Standard Residences Brickell in Miami, Florida.  

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

The post Construction Starts Remained Flat in February appeared first on Dodge Construction Network.

HAMILTON, NJ —October 18, 2023 — Total construction starts fell 6% in September to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. Nonresidential starts lost 4%, residential starts declined 6%, and nonbuilding starts fell 9%.

Year-to-date through September 2023, total construction starts were 3% below that of 2022. Residential and nonresidential starts were down 17% and 7%, respectively; however, nonbuilding starts were up 25% on a year-to-date basis. For the 12 months ending September 2023, total construction starts were unchanged. Nonbuilding starts were 22% higher, and nonresidential building starts gained 3%. Conversely, on a 12-month rolling basis, residential starts posted a 16% decline.

“Risks continue to mount for the construction sector,” said Richard Branch, chief economist for Dodge Construction Network. “Over the last 12 months, construction starts have essentially froze as rates increased and credit tightened. The industry needs further adjusting as rates are expected to stay higher for longer, along with the potential for higher energy costs and continued political uncertainty. A return to broad-based growth in construction starts is still some time away.”

Nonbuilding
Nonbuilding construction starts decreased in September, falling 9% to a seasonally adjusted annual rate of $345 billion. Highway and bridge starts lost 15% and environmental public works starts fell 29%. Not all sectors fell, however: miscellaneous nonbuilding starts rose 4%, and utility/gas plant starts gained 14%. Year-to-date through September, nonbuilding starts were up 25%. Utility/gas plants rose 58%, and miscellaneous nonbuilding starts were up 23%. Highway and bridge starts gained 13%, and environmental public works rose 16%.

For the past 12 months ending in September 2023, total nonbuilding starts were 22% higher than that of September 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 35% and 22%, respectively. Highway and bridge starts, in addition to environmental public works starts, were both up 18% on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in September were the $4.5 billion Sun Zia transmission line across Arizona and New Mexico, the $525 million fourth phase of the Cedar Springs wind farm in Converse County, Wyoming, and the $485 million Prospect Lake Clear Water Center in Fort Lauderdale, Florida.

Nonresidential

Nonresidential building starts fell 4% in September to a seasonally adjusted annual rate of $459 billion. Commercial starts rose 6% due to strength in data center work (classified as an office structure in the Dodge database) and retail. Institutional starts fell 8% in September despite a healthy gain in education starts, and manufacturing starts declined 13%. On a year-to-date basis through September, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 5%, while commercial and manufacturing starts fell 6% and 31%, respectively.

For the past 12 months ending in September 2023, total nonresidential building starts were 3% higher than that ending September 2022. Manufacturing starts were 8% lower. Institutional starts improved by 8%, and commercial starts gained 4%.

The largest nonresidential building projects to break ground in September were the $2.5 billion Hyundai/SK EV battery plant in Cartersville, Georgia, a $1.1 billion prison in Elmore, Alabama, and the $1 billion Microsoft data center in Mount Pleasant, Wisconsin.

Residential

Residential building starts fell 6% in September to a seasonally adjusted annual rate of $394 billion. Single family starts gained 1%, while multifamily starts lost 17%. On a year-to-date basis through September 2023, total residential starts were down 17%. Single family starts were 19% lower, and multifamily starts were down 12%.

For the past 12 months ending in September 2023, residential starts were 16% lower than in 2022. Single family starts were 22% lower, while multifamily starts were down 5% on a rolling 12-month basis.

The largest multifamily structures to break ground in September were the $385 million first phase of the South Pier Residential Towers in Tempe, Arizona, the $275 million first phase of the Casa Bella Condominiums in Miami, Florida, and the $260 million Chapel Block mixed-use development in Philadelphia, Pennsylvania.

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

Watch Chief Economist Richard Branch discuss September Construction Starts here.

September 2023 CONSTRUCTION STARTS

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HAMILTON, NJ —September 20, 2023 — Total construction starts rose 6% in August to a seasonally adjusted annual rate of $1.3 trillion, according to Dodge Construction Network. Nonresidential starts rose 40% thanks to a large pickup in manufacturing and transportation buildings. Residential and nonbuilding starts fell 1% and 14%, respectively.

Year-to-date through August 2023, total construction starts were 5% below that of 2022. Residential and nonresidential starts were down 18% and 9%, respectively; however, nonbuilding starts were up 22%. For the 12 months ending August 2023, total construction starts were unchanged. Nonbuilding starts were 20% higher, and nonresidential building starts gained 6%. Conversely, on a 12-month rolling basis, residential starts posted a 17% decline overall.

“Despite the August gain, the construction sector is running uphill,” said Richard Branch, chief economist for Dodge Construction Network. “Fear of an imminent recession seems to have abated, which should provide a boost of confidence to the sector. However, higher interest rates, labor shortages and significantly tighter lending standards will weigh down starts in the final quarter of the year. This will persist for the foreseeable future, lasting until interest rates start to move lower.”

Nonbuilding
Nonbuilding construction starts lost ground in August, falling 14% to a seasonally adjusted annual rate of $380 billion. The decline follows a strong July which saw the start of a $12 billion LNG project. Nonbuilding starts increased 12% in August when excluding the utility/gas plant category, which fell 45% during the month. Miscellaneous nonbuilding starts shot 39% higher, and highway and bridge starts gained 19%. However, environmental public works starts shed 1%.

Year-to-date through August, nonbuilding starts gained 22%. Utility/gas plants rose 40%, and miscellaneous nonbuilding starts were up 33%. Highway and bridge starts gained 13%, and environmental public works rose 17%.

For the 12 months ending August 2023, total nonbuilding starts were 20% higher than that of August 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 23% and 30%, respectively. Highway and bridge starts were up 17%, and environmental public works rose 18% on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in August were the $3.5 billion TransWest Transmission Project spanning Wyoming, Colorado, Utah and Nevada, the $2.9 billion Mid-Barataria Sediment Diversion projects in Port Sulphur, Louisiana, and the $1.5 billion New England Clean Energy Connect Power Line in Maine.

Nonresidential

Nonresidential building starts gained 40% in August to a seasonally adjusted annual rate of $475 billion, largely due to a surge in manufacturing activity. Nonresidential building starts would have gained 24% when excluding these large manufacturing projects. Commercial starts rose 8% in August led by gains in parking structures and hotels, and institutional starts rose 35% with all sectors but dormitories increasing. Manufacturing starts rose 285% from July to August, fueled by two large projects. On a year-to-date basis through August, total nonresidential starts were 9% lower than that of 2022. Institutional starts gained 3%, while commercial and manufacturing starts fell 8% and 32%, respectively.

For the 12 months ending August 2023, total nonresidential building starts were 6% higher than that ending August 2022. Manufacturing starts were 2% higher. Institutional starts improved 8%, and commercial starts gained 6%.

The largest nonresidential building projects to break ground in August were the $2.5 billion John Palmour Manufacturing Center for Silicon Carbide in Siler City, North Carolina, the $2 billion VinFast electrical vehicle plant in New Hill, North Carolina, and the $1.4 billion Midfield Satellite Concourse at Los Angeles International Airport in California.

Residential

Residential building starts fell 1% in August to a seasonally adjusted annual rate of $418 billion. Single family starts gained 2%, while multifamily starts lost 5%. On a year-to-date basis through August 2023, total residential starts were down 18%. Single family starts were 21% lower, and multifamily starts were down 12%.

For the 12 months ending in August 2023, residential starts were 17% lower than in 2022. Single family starts were 23% lower, while multifamily starts were down 3% on a rolling 12-month basis.

The largest multifamily structures to break ground in August were the $530 million Hub on Campus mixed-use building in Knoxville, Tennessee, the $425 million 250 Water Street mixed-use tower in New York, New York, and the $340 million Ritz Carlton residences in North Palm Beach, Florida.

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

Watch Chief Economist Richard Branch discuss August Construction Starts here.

August 2023 CONSTRUCTION STARTS

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HAMILTON, NJ —August 16, 2023 — Total construction starts rose 17% in July to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. Nonbuilding starts drove the increase, rising 38%, due to the start of a singular large LNG facility. Residential starts rose 20%, while nonresidential building starts lost 6%.

Year-to-date through July 2023, total construction starts were 7% below that of 2022. Residential and nonresidential starts were down 21% and 7% respectively; however, nonbuilding starts were up 20% on a year-to-date basis. For the 12 months ending July 2023, total construction starts were 3% higher than that of 2022. Nonbuilding starts were 21% higher, and nonresidential building starts gained 16%. Conversely, on a 12-month rolling basis, residential starts posted a 17% decline overall.

“Construction starts have plateaued and are making little headway,” said Richard Branch, chief economist for 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

Nonbuilding construction starts surged in July, climbing 38% to a seasonally adjusted annual rate of $440 billion, due mostly to the start of a large LNG facility. Without the mentioned facility included, total nonbuilding starts would have dropped 7%. Environmental public works also rose dramatically, increasing 62% due to the start of a large dock facility. Highway and bridge starts lost 4% in the month. Miscellaneous nonbuilding starts fell 71% following the start of the Buffalo Bills’ new stadium in June. Year-to-date through July, nonbuilding starts gained 20%. Utility/gas plants rose 23%, and miscellaneous nonbuilding starts were up 37%. Highway and bridge starts gained 14%, along with environmental public works rising 19%.

For the 12 months ending July 2023, total nonbuilding starts were 21% higher than the 12 months ending July 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 9% and 32%, respectively. Highway and bridge starts were up 22%, and environmental public works rose 25% 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

Nonresidential building starts fell 6% in July to a seasonally adjusted annual rate of $334 billion. Commercial starts rose 11% on the back of gains in warehouse and parking starts, offsetting a decline in office and hotel starts. Institutional starts were down 11%, with education, dormitories, and religious the only categories to show an increase. Manufacturing starts dropped 39% in July. On a year-to-date basis through July, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 8%, while manufacturing and commercial starts fell 9% and 31%, respectively.

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

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, California, and the $277 million first phase of an airside concourse at Orlando International Airport in Florida.

Residential

Residential building starts rose 20% in July to a seasonally adjusted annual rate of $414 billion. Single family starts gained 2%, while multifamily starts shot 62% higher. On a year-to-date basis through July 2023, total residential starts were down 21%. Single family starts were 25% lower, and multifamily starts were down 14%.

For the 12 months ending in July 2023, residential starts were 17% lower than in 2022. Single family starts were 25% lower, while multifamily starts were down only 0.1% 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.

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

Watch Chief Economist Richard Branch discuss July Construction Starts here.

July 2023 CONSTRUCTION STARTS

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HAMILTON, New Jersey — July 26, 2023 — New data from Dodge Construction Network found that the value of commercial and multifamily construction starts across the top 10 metropolitan areas of the U.S. fell 10% in the first half of 2023, relative to that of 2022. Nationally, commercial and multifamily construction starts fell 14% on a year-to-date basis through June.

Commercial and multifamily construction has suffered thus far into 2023 as tighter lending standards, higher interest rates, slowing demand and societal changes, such as continued remote work, impact the sector.

In the first half of 2023, the New York metropolitan area was the top market for commercial and multifamily starts at $10.8 billion, a 31% decrease from the first six months of 2022. In second was the Dallas, Texas, metropolitan area, totaling $6.7 billion in the first half of 2023, a 17% decline. The Atlanta, Georgia, metro area ranked third with $5.4 billion in starts — an 18% gain over 2022 on a year-to-date basis.

The remaining top 10 metropolitan areas through the first half of 2023 were:

• Miami, Florida, flat ($4.7 billion)
• Houston, Texas, up 29% ($4.7 billion)
• Los Angeles, California up 2% ($4.3 billion)
• Chicago, Illinois up 64% ($4.2 billion)
• Phoenix, Arizona, down 21% ($3.5 billion)
• Boston, Massachusetts, down 2% ($3.3 billion)
• Washington, D.C., down 43% to ($3.1 billion).

The top 10 metropolitan areas accounted for 39% of all commercial and multifamily starts in the United States in the first half of 2023, up from 37% in that of 2022.

Commercial and multifamily starts are comprised of office buildings, stores, hotels, warehouses, commercial garages and multifamily housing. Not included in this ranking are institutional projects (e.g., educational facilities, hospitals, convention centers, casinos, transportation terminals), manufacturing buildings, single family housing, public works and electric utilities/gas plants.

In total, U.S. commercial and multifamily building starts fell 14% to $130 billion on a year-to-date basis through six months. Multifamily starts lost 17%, declining to $61 billion, and commercial starts fell 11% to $70 billion. In the first half of 2023, across the top 10 metro areas, commercial building starts rose 1% to $27 billion, while multifamily starts fell 21% to $24 billion.

“The wind has gone out of the sails for the commercial and multifamily sectors,”

stated Richard Branch, chief economist for Dodge Construction Network. “Starts are likely to worsen still in the second half of the year, as interest rates head even higher. Tighter financial conditions and significant market shifts have led to precipitous declines in starts across many metropolitan areas. However, even as markets begin to recover next year, significant structural change in the sector could lead to a tepid recovery with levels well below what was seen before the pandemic.”

In the New York metropolitan area, commercial and multifamily construction starts fell 31% in the first six months of 2023 to $10.8 billion. Multifamily starts were down 39% following a robust first half of last year., with the largest multifamily projects to break ground being the $500 million 7112 Park Ave project and the $414 million North Cove mixed-use building. At the same time, commercial starts fell 11% due to a pullback in parking structures and retail, offsetting gains in hotel, warehouse and office construction. The largest commercial projects to get started in the first half of 2023 were the $100 million Rolex headquarters and the $94 million College Point Logistics Center.

Commercial and multifamily starts in the Dallas, Texas, metro area were down 17% to $6.7 billion on a year-to-date basis through June. Commercial starts fell 17%, despite gains in office and retail structures. The largest commercial projects to get underway during the first half of the year were the $154 million Aligned data center and the $119 million Google data center. Multifamily starts were down 18%, with largest multifamily project starts being the $268 million Knox mixed-use building and the $118 million first phase of the Alexan Frisco Brinkman Ranch apartments.

In the Atlanta, Georgia, metropolitan area, commercial and multifamily construction starts rose 18% to $5.4 billion during the first half of 2023. On a year-to-date basis, multifamily starts were down 23% from the first half of 2022. The largest multifamily projects to break ground during the first six months of the year were the $500 million 1072 W Peachtree mixed-use building and the $245 million 1077 Juniper Apartments. In the first six months of 2023, commercial starts rose 61% from the first six months of 2022, with all categories but retail posting gains. The largest commercial projects to get underway during the year were the $642 million first phase of the Facebook Stanton Springs data center and a $171 million data center.

Miami, Florida, commercial and multifamily starts during the first half of 2023 were on par with that of 2022 at $4.7 billion. Commercial starts in Miami gained 4% on a year-to-date basis through June due to a large increase in warehouse starts amid declines across all other sectors. The largest commercial projects to get started during the first half of 2023 were a $61 million warehouse and the $46 million Gaumard Scientific building. In the first half of 2023, multifamily starts fell 1% compared to that of 2022. The largest multifamily projects to get started through June 2023 were the $164 million second phase of the Baccarat Residences and the $160 million first phase of the Namdar mixed-use building.

The Houston, Texas, commercial and multifamily building starts rose 29% on a year-to-date basis through June to $4.7 billion. Commercial starts in Houston gained 24% in the first six months of the year with all categories posting healthy growth. The largest commercial projects to start during the first half of the year were the $77 million Port 99 warehouse and the $50 million FreezPak cold storage building. Multifamily starts meanwhile rose 40% in the first half of the year. The largest multifamily buildings to break ground in the first six months of 2023 were the $200 million DeisoMoss mixed-use building and the $99 million Residences on Westheimer.

Together, commercial and multifamily starts in the Los Angeles, California, metropolitan area grew 2% to $4.2 billion during the first half of 2023. During the first half of the year, multifamily construction fell 12%. The largest multifamily structures to break ground during the first half of 2023 were the $385 million 710 Broadway mixed-use building and the $150 million Ritz Carlton VEA Newport Beach. In the first six months of 2023, commercial starts moved 33% higher than the first six months of 2022, with all commercial categories posting an increase. The largest commercial projects to get started during the first half of the year were the $490 million JMB Century City Center office building and the $70 million 6381 Hollywood Blvd office building.

In Chicago, Illinois, commercial and multifamily starts were up 64% on a year-to-date basis through June 2023 to $4.2 billion. Multifamily starts were up 53%, through the first six months of 2023. The largest multifamily projects to break ground being the $190 million Albany Terrace and Irene McCoy Gaines apartment alteration project and the $140 million 1114 W Carroll Ave apartment building. In the first six months of 2023, total commercial starts rose 71% compared to the first six months of 2022. The gain was the result of a large increase in office starts, although hotel and retail construction also rose. The largest commercial projects to get underway during the first half of the year were the $1 billion Prime data center campus and the $330 million 917 W Fulton Market office building.

Phoenix, Arizona, commercial and multifamily starts during the first six months of 2023 were down 21% to $3.5 billion from the first half of 2022. Commercial starts in Phoenix fell 20% on a year-to-date basis through June with only office and retail increasing. The largest commercial projects to start during the first six months of 2023 were the $150 million QTS McDowell data center and the $100 million Prologis Commerce Park Building #3 warehouse. In the first half of 2023, multifamily construction fell 24% from the first six months of 2022. The largest multifamily buildings to get started were the $100 million Portico condos and the $88 million RD Kirkland apartments.

Boston, Massachusetts, commercial and multifamily construction starts dropped 2% to $3.3 billion during the first half of 2023. Commercial starts moved 5% higher on a year-to-date basis through June due to an increase in office and parking construction. The largest commercial projects to break ground during the first six months of 2023 were the $228 million Landmark Center/401 Park office building and the $130 million Reservoir Woods East office building. Multifamily starts fell 7% on a year-to-date basis through June 2023. The largest multifamily structures to break ground so far this year were the $175 million third phase of the 135 Broadway/MXD residential building and the $132 million 1690 Revere Beach Parkway residential building.

In Washington, D.C., commercial and multifamily starts in the first half of 2023 were down 43% from the first half of 2022 to $3.1 billion. Multifamily starts lost 45% on a year-to-date basis through June. The largest multifamily projects to get underway during the first half of the year were the $215 million Four Season condo building and the $100 million Residences at Forest Glen. Commercial starts were down 42% during the first six months of 2023, with warehouse being the only category to post a gain. The largest commercial projects to break ground during the first half of the year were the $500 million Smithsonian South Campus Castle renovation and the $157 million first phase of the NVAL3 data center.

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HAMILTON, NJ —July 21, 2023 — Total construction starts fell 9% in June to a seasonally adjusted annual rate of $1 trillion, according to Dodge Construction Network. Nonresidential starts led the downturn, falling 14%. Nonbuilding starts fell 9%, and residential starts lost 4%.

Year-to-date through June 2023, total construction starts were 5% below that of 2022. While residential and nonresidential starts were down 24% and 2%, respectively, nonbuilding starts gained 29%. For the 12 months ending June 2023, total construction starts were 9% higher than that of 2022. Nonbuilding starts were 34% higher, and nonresidential building starts gained 25%. However, on a 12-month rolling basis, residential starts posted a 17% decline overall.

“Construction starts are oscillating — up one month and down the next,” said Richard Branch, chief economist for Dodge Construction Network. “The presence, or absence, of mega-projects is a key influencer in this trend. Nevertheless, high interest rates and tightening lending standards are leading to uncertainty among owners and developers, also creating hesitation among stakeholders, leading them to carefully assess whether projects will break ground. These conditions will persist through the remainder of the year — meaning little forward motion in construction starts.”

Nonbuilding
Nonbuilding construction slipped 9% in June to a seasonally adjusted annual rate of $317 billion. Despite a strong showing in May, utility/gas plants fell 43%, and highway and bridge starts dropped 22%. Conversely, environmental public works starts gained 1%, and miscellaneous nonbuilding starts more than doubled due to the start of a large stadium project. Year-to-date through June, nonbuilding starts gained 29%. Utility/gas plants rose 61%, and miscellaneous nonbuilding starts were up 60%. Highway and bridge starts also gained 19%, along with environmental public works rising 14%.

For the 12 months ending June 2023, total nonbuilding starts were 34% higher than that of  2022. Utility/gas plant starts rose 62%, and miscellaneous nonbuilding starts were 45% higher. Highway and bridge starts were up 25%, and environmental public works rose 24% on a 12-month rolling sum basis.

The largest nonbuilding projects to break ground in June were the $2.6 billion Matterhorn Express Pipeline in Texas, the $1.4 billion Buffalo Bills stadium in Orchard Park, New York, and the $930 million Bissell & Lemay wastewater treatment plant in St. Louis, Missouri.

Nonresidential

Nonresidential building starts shrank 14% in June to a seasonally adjusted annual rate of $348 billion following an aggressive growth in manufacturing starts in May. Commercial starts fell 6% with gains in office and hotel offset by a pullback in warehousing and parking structures, while manufacturing starts lost 67%. Institutional starts gained 15% in June due to healthcare and airport terminal work. On a year-to-date basis through June, total nonresidential starts were 2% lower than that of 2022. Institutional starts gained 9%, while manufacturing and commercial starts fell 6% and 11%, respectively.

For the 12 months ending June 2023, total nonresidential building starts were 25% higher than that ending June 2022. Manufacturing starts were 76% higher, institutional starts improved 21%, and commercial starts gained 9%.

The largest nonresidential building projects to break ground in June were the $2.6 billion JetBlue Terminal 6 at JFK airport in Jamaica, New York, the $625 million first phase of the GlobiTech Semiconductor plant in Sherman, Texas, and a $558 million hospital tower at Strong Memorial Hospital in Rochester, New York.

Residential

Residential building starts fell 4% in June to a seasonally adjusted annual rate of $344 billion. Single family starts gained 8%. Multifamily starts lost 23%. On a year-to-date basis through June 2023, total residential starts were down 24%. Single family starts were 27% lower, and multifamily starts were down 17%.

For the 12 months ending in June 2023, residential starts were 17% lower than that of 2022. Single family starts were 26% lower, while multifamily starts were up 2% on a rolling 12-month basis.

The largest multifamily structures to break ground in June were the $500 million 1072 W Peachtree building in Atlanta, Georgia, the $450 million Pendry-One Ashley condo tower in Tampa, Florida, and the $345 million Merchant Building in Columbus, Ohio.

Regionally, total construction starts in June fell in all regions except the West and Northeast.

Watch Chief Economist Richard Branch discuss June Construction Starts here.

June 2023 CONSTRUCTION STARTS

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In June, the index for final demand less foods, energy, and trade services saw a 0.1% increase, signaling a steady upward trend following no change in May. However, it’s important to note that the index for final demand transportation and warehousing services experienced a decline of 0.9%. This decline brings some welcomed relief in costs for some materials and services. On the goods front, prices for final demand goods remained unchanged in June, following a decline of 1.6 % in May. The graph below illustrates the year-over-year percent change in a composite index of construction materials, represented by the red line. We observe a noticeable upturn in this trend, which raises concerns as it typically precedes bid price changes (blue line) by approximately 12 months. If this upturn persists, it could potentially lead to an increase in bid prices in 2024, which might pose challenges for the construction industry. It is worth noting that certain sectors, such as the lumber industry, have continued to experience disinflationary trends. This is particularly promising for the residential sector, which heavily relies on lumber, creating an optimistic outlook for the housing market’s anticipated growth in the upcoming year. However, the index for final demand energy showed a noteworthy increase of 0.7%. This indicates potential cost increases in the production of certain materials, like cement (13.3%) and concrete (11.3%), which have continued to rise.

In summary, the June PPI release reveals a slight increase in final demand prices, primarily influenced by services excluding trade, transportation, and warehousing. This finding aligns with expectations of another Federal Reserve rate hike at their upcoming July meeting. The construction industry, facing ongoing challenges, will continue to grapple with the persistent upward trend in prices and the impact of inflation. While there are signs of improvement, inflation remains a stubborn issue that requires careful management and strategic approaches from the Fed.

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The Bureau of Labor Statistics (BLS) reported that nonfarm payrolls climbed by a seasonally adjusted 209,000 in June, falling below economists’ expectations. The unemployment rate fell to 3.6%, while the average hourly earnings rose 4.4% on a year-over-year (y/y) basis, up from 4.3% y/y in May.

Employment in construction was up 23,000 in June. Thus far this year, construction has added a monthly average of 15,000 jobs. In June, residential specialty trade contractors posted the largest monthly increase in employment (+10,000), followed by employment in heavy and civil engineering construction (+7,300), nonresidential building construction (+5,400) and residential building construction (+800).

The consecutive monthly increase in residential building construction employment is an indication that single family home construction might be past the trough of the cycle and could show improvement in the second half of the year. The BLS report also shows that the average hourly earnings in construction were up 4.7% y/y in June, slightly faster than the pace for the overall economy. Significant pressure on construction wages should be expected over the next few months, as construction labor remains in short supply and job openings continue to ramp up.

Employment in construction was up 2.8% year-over-year in the first half of 2023, defying the higher interest rate environment. The BLS U.S. jobs report is still in line with another Federal Reserve rate hike at the July meeting. Higher interest rates for a longer period and tighter lending standards do not bode well for construction starts and employment over the next 12 months. In particular, commercial and income-property construction starts will be hardest hit.

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