Total construction starts fell -4% in April to a seasonally adjusted annual rate of $1.04 trillion, according to Dodge Construction Network. Nonresidential starts led the drop as manufacturing fell -22% following strong performance in March. To balance the decline, nonbuilding starts rose +7%, and residential building starts gained +12%.
On a year-to-date basis through April, total construction starts were -7% below the first four months of 2022. Residential starts were down -27%, and nonresidential and nonbuilding starts grew +7% and +16%, respectively. For the 12 months ending April 2023, total construction starts were +11% higher than the 12 months ending April 2022. Nonresidential and nonbuilding starts both showed gains at +34% and +24%, respectively; however, residential starts hindered overall growth with a 13% decline on a 12-month rolling basis.
“The construction sector continues to sweep its economic worries under the rug, even with inflation, unstable banking, and the potential breach of the U.S. debt ceiling,” said Richard Branch, chief economist for Dodge Construction Network, in the press release. “While the presence of, or lack thereof, large manufacturing projects each month has made the data more volatile, the underlying trends point to a very healthy sector.
“However, this is likely transitory. The Dodge Momentum Index, which tracks projects entering the earliest stages of planning, is falling, which should lead to weaker starts in the second half of the year – especially for the private sector.”
Nonresidential building starts declined -22% in April to a seasonally adjusted annual rate of $383 billion. This sharp decline follows an equally large in March, when numerous large manufacturing plants took off. In April, manufacturing starts lost a staggering 68%. Institutional starts dropped -13%, largely due to a pullback in healthcare construction, while commercial starts improved +5% thanks to an increase in retail and office construction. Year-over-year, in January 2023 through April 2023, total nonresidential starts were +7% higher than in the first four months of 2022. Institutional starts gained +14%, manufacturing starts were +4% higher, and commercial starts were up +2%.
Between April 2022 and April 2023, total nonresidential building starts were +34% higher than April 2021 through April 2022. Manufacturing starts were +118% higher, institutional starts improved +22%, and commercial starts gained +18%.
The largest nonresidential building projects to break ground in April were the $1.2-billion Hanwha Qcells solar plant manufacturing plant in Cartersville, GA; the $650-million Group14 battery plant in Moses Lake, WA; and the $600-million Mutual of Omaha headquarters in Omaha, NE.
Residential
Residential building starts increased +12% in April to a seasonally adjusted annual rate of $373 billion. Single-family and multi-family starts remained strong, increasing +14% and +10%, respectively. On a year-to-date basis through April 2023, total residential starts were down -27%. Single family starts were -34% lower, and multi-family starts were down -10%.
For the 12 months ending in April 2023, residential starts were -13% lower than that ending in April 2022. Single family starts were -25% lower, while multi-family starts were up +14% on a rolling 12-month basis.
The largest multi-family structures to break ground in April were the $549-million Mana’olana Place mixed-use building in Honolulu, HI; a $500-million mixed-use building in Flushing, NY; and the $385-million 710 Broadway Apartments in Santa Monica, CA.
Nonbuilding
Nonbuilding construction starts improved +7% in April to a seasonally adjusted annual rate of $281 billion. The utility/gas plant category had the largest gain in the month, rising +76%, with a small increase in street and bridge starts at +5%. Miscellaneous nonbuilding starts fell -16%, and environmental public works lost -17%. Year-to-date through April, nonbuilding starts gained +16%. Utility/gas plants rose +37%, and miscellaneous nonbuilding starts were up +36%. Environmental public works rose +10%, and highway and bridge starts gained +9%.
For the 12 months ending April 2023, total nonbuilding starts were +24% higher than the 12 months ending April 2022, with significant gains across each sector. Utility/gas plant starts rose +43%, miscellaneous nonbuilding starts were +27% higher, highway and bridge starts were up +20%, and environmental public works rose +17% on a 12-month rolling sum basis.
The largest nonbuilding projects to break ground in April were the $750-million Magnolia Power/Kindle Energy generating station in Plaquemine, LA: the $738-million Rock Creek wind farm in Laramie, WY; and the $542-million Eagle LNG export facility in Jacksonville, FL.