August Construction Starts Declined 9% to $1.25 Trillion

September 22, 2022 from Floor Focus FloorDaily News

Hamilton, NJ, September 22, 2022 – Total construction starts fell 9% 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. In August, nonresidential building starts rose 7%, residential starts were 1% higher, while nonbuilding starts lost 36%.

Year-to-date, total construction was 16% higher in the first eight months of 2022 compared to the same period of 2021. Nonresidential building starts rose 35% over the year, residential starts were 1% higher, and nonbuilding starts were up 21%.

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

“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,” said 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.”

Below is the breakdown for construction starts:

* Nonbuilding construction starts fell 36% 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%. In August, highway and bridge starts moved 21% higher, environmental public works increased 39%, while miscellaneous nonbuilding starts lost 9%. Through the first eight months of the year, total nonbuilding starts were 21% higher than in 2021. Utility/gas plant starts gained 57% through the first eight months, highway and bridge starts were 21% higher, and environmental public works were 14% higher. Miscellaneous nonbuilding starts, by contrast, were down 14% through the first eight months.

For the 12 months ending August 2022, total nonbuilding starts were 15% higher than in the 12 months ending August 2021. Utility/gas plant starts were 46% higher, highway and bridge starts rose 11%, and environmental public works increased by 15%. Miscellaneous nonbuilding starts decreased by 14%.

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, Hawaii, and the $460 million first phase of the Sand Island wastewater treatment plant in Honolulu, Hawaii.

* Nonresidential building starts moved 7% higher in August to a seasonally adjusted annual rate of $569.6 billion. August’s gain comes on the heels of a massive increase in July that saw the start of several large manufacturing projects. Supporting the August gain were an airport terminal, a chip fabrication facility, and a large hotel and entertainment complex. Commercial starts were 22% higher in August, with all categories posting an increase. Institutional starts were up 62%, despite education and healthcare starts declining, and manufacturing starts lost 42% during the month. Through the first eight months of 2022, nonresidential building starts were 35% higher than the first eight months of 2021. Commercial starts advanced 17% and institutional starts rose 18%, while manufacturing starts were 231% higher on a year-to-date basis.

For the 12 months ending August 2022, nonresidential building starts were 33% higher than in the 12 months ending August 2021. Commercial starts grew 17%, institutional starts rose 17%, and manufacturing starts rose 224% 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 and Convention Center in Chula Vista, California.

* Residential building starts rose 1% in August to a seasonally adjusted annual rate of $400.7 billion. Single family starts lost 10%, while multifamily starts gained 19%. Through the first eight months of 2022, residential starts were 1% higher than during the same timeframe in 2021. Multifamily starts were up 28%, while single family housing slipped 8%.

For the 12 months ending August 2022, residential starts improved 4% from the same period ending August 2021. Single family starts were 6% lower, while multifamily starts were 33% 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, Florida, the $500 million 30 Van Ness mixed-use tower in San Francisco, California, 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.