Total construction starts fell -7% in October to a seasonally adjusted annual rate of $1.1 trillion, according to Dodge Construction Network. Nonbuilding and residential starts fell -32% and -1%, respectively. Conversely, nonresidential building starts gained +8% during the month.
Year-to-date through Oct. 2023, total construction starts were -4% below that of 2022. Residential and nonresidential starts were down -15% and -7%, respectively. However, nonbuilding starts were up +20%. For the 12 months ending October 2023, total construction starts were down -1%. Nonbuilding starts were +22% higher, and nonresidential building starts gained +1%. On a 12-month rolling basis, residential starts posted a -15% decline.
“Construction starts have weakened over the last two months as high interest rates and tight credit have restrained activity,” said Richard Branch, chief economist for Dodge Construction Network, in the press release. “While it seems likely that the Federal Reserve will hold off raising rates further, it will take time until they consider easing. This will likely result in a continued softening in construction starts over the next several months.”
Nonresidential
Nonresidential building starts rose +8% in October to a seasonally adjusted annual rate of $490 billion. The increase was led by the groundbreaking of several very large manufacturing plants during the month. If not for those plants total commercial starts would have lost 2-8%.
Dodge said commercial starts dropped -18% during the month due to a very sharp pullback in office activity, while institutional starts fell -15%, despite a solid gain in healthcare starts. Year-to-date through October, total nonresidential starts were -7% lower than that of 2022. Institutional starts gained +4%, while commercial and manufacturing starts fell -10% and -20%, respectively.
For the past 12 months ending in Oct. 2023, total nonresidential building starts were +1% higher than that ending Oct. 2022. Manufacturing starts were +2% higher, institutional starts improved by +5%, and commercial starts lost -4%.
The largest nonresidential building projects to break ground in October were the $7.5-billion Micron semiconductor fabrication facility in Boise, ID; the $2.2 -billion Hyundai/LG EV battery plant in Ellabell, GA; and the $1.5-billion Nucor Sheet Mill in Apple Grove, WV.
Residential
Residential building starts fell -1% in October to a seasonally adjusted annual rate of $385 billion. Single-family starts lost -2%, while multi-family starts were flat. On a year-to-date basis through October 2023, total residential starts were down -15%. Single-family starts dropped -17%, and multi-family starts were down -12%.
For the 12 months ending in Oct. 2023, residential starts were -15% lower than in 2022. Single-family starts were -20% lower, while multi-family starts were down -7% on a rolling 12-month basis.
The largest multi-family structures to break ground in October were the $364-million QPX mixed-use tower in Long Island City, NY; the $350-million mixed-use building on W. 37th Street in New York; and the $225-million first phase of the Baccarat Residences in Miami.
Nonbuilding
Nonbuilding construction starts lost -32% in October, falling to a seasonally-adjusted $231 billion. A decline in utility/gas starts drove category starts to a 12-month low. Miscellaneous nonbuilding stars dropped -20%, and environmental starts were -15% lower. However, highway and bridge starts improved +6% in October. Year-to-date through October, nonbuilding starts were up +20% overall. Utility/gas plants rose +52%, and miscellaneous nonbuilding starts increased +18%. Highway and bridge starts gained +9%, and environmental public works rose +13%.
For the past 12 months ending in October 2023, total nonbuilding starts were +22% higher than in the 12 months ending in October 2022. Utility/gas plant and miscellaneous nonbuilding starts rose +56% and +15%, respectively. Highway and bridge starts were up +11% and environmental public works starts were +15% higher on a 12-month rolling sum basis. Overall, the success in nonbuilding starts prevented further declines in the overall monthly starts values.
The largest nonbuilding projects to break ground in October were the $319-million Newton-Weston bridge replacement in Newton, MA; the $300-million Cadence Solar Center in York Township, OH; and the $280-million Estonian Solar project in Cooper, TX.