Total construction starts dropped- 1% in May to a seasonally adjusted annual rate of $902.8 billion, according to the latest data from Dodge Data & Analytics. The brunt of the decline was borne by residential starts, while nonresidential and nonbuilding starts continued their recovery from the COVID-19 pandemic.
“The weight of higher material prices and a lack of skilled labor are having a direct and notable influence on residential construction activity,” said Richard Branch, chief economist for Dodge Data & Analytics, in the press release. “These negative factors are expected to continue to impact the sector over the remainder of the year and will result in a less positive influence from housing on overall levels of construction activity.
“While feeling similar effects, the nonresidential sector continues its modest recovery off the lows of last summer. There are enough projects in the planning pipeline to suggest this trend should continue into next year, but higher material prices will result in longer lead times to groundbreaking and more temperate improvements in nonresidential starts.”
Nonresidential building starts jumped +10% in May to a seasonally adjusted annual rate of $309.5 billion. Manufacturing starts more than doubled over the month as a large refinery broke ground. Commercial starts gained +6%, with only the office category losing ground. Institutional starts were down-2% in May, despite a large increase in health-care projects. Year-to-date, total nonresidential building starts were down -5% compared to the first five months of 2020. Institutional starts were -9% lower, while commercial starts were down -7%. Manufacturing starts were up +42% on a year-to-date basis.
For the 12 months ending May 2021, nonresidential building starts were -19% lower than the 12 months ending May 2020. Commercial starts were down -20%, while institutional starts fell -14%. Manufacturing starts dropped -43% in the 12 months ending May 2021.
The largest nonresidential building projects to break ground in May were the $1.5-billion Diamond Green Diesel refinery in Port Arthur, TX, the $920-million Michigan Medicine Clinical Inpatient Tower in Ann Arbor, MI, and the $475-million University of California Living and Learning dorm project in San Diego, CA.
Residential building starts lost -10% in May to a seasonally adjusted annual rate of $394.2 billion. Single-family starts were -12% lower, while multi-family starts dropped -7%. Year-to-date, total residential starts were +30% higher than the same period a year earlier. Single-family starts were up +37%, while multi-family starts were +12% higher. For the 12 months ending May 2021, total residential starts were +18% higher than the 12 months ending May 2020. Single-family starts gained +27%, while multi-family starts were down -2% on a 12-month sum basis. The largest multi-family structures to break ground in May were a $500-million mixed-use project in Brooklyn, NY; the $230-million Mather Senior Living Community in McLean, VA; and the $160-million Alcove Tower in Nashville, TN.
Nonbuilding construction starts rose +5% in May to a seasonally adjusted annual rate of $199.2 billion. The utility and gas plant category increased +22% due to the start of a large transmission line. Year-to-date through the first five months of 2021, total nonbuilding starts were +8% higher than in 2020. Environmental public works were up +37%, while utility/gas plant and miscellaneous nonbuilding starts were up +25% and +11%, respectively.
The largest nonbuilding projects to break ground in May were the $915-million Gateway South transmission project in Medicine Bow, WY, and a $528-million sewage plant in Salt Lake City, UT.