An increase in nonresidential construction starts contributed to an increase in Dodge Construction Network’s (DCN) August total construction starts index. DCN reports total construction starts increased by 6% in August to a seasonally adjusted annual rate of $1.3 trillion.
DCN data shows nonresidential starts rose 40% in August due to a rise in manufacturing and transportation projects. Residential building starts fell by 1%. Year-to-date, total construction starts remain 5% below that of 2022. Residential and nonresidential starts were down by 18% and 9%, respectively.
“Despite the August gain, the construction sector is running uphill,” says Richard Branch, DCN chief economist. “Fear of an imminent recession seems to have abated, boosting the sector’s confidence. 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 until interest rates start to lower.”
Nonresidential Construction Starts
Nonresidential building starts increased by 40% in August to a seasonally adjusted annual rate of $475 billion, largely due to a surge in manufacturing activity. Commercial starts rose 8% in August, and institutional starts rose 35%. Manufacturing starts rose 285% from July to August, fueled by two large projects. Year-to-date, total nonresidential starts were 9% lower than that of 2022. Institutional starts gained 3%, while commercial and manufacturing starts fell 8% and 32%, respectively.
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, N.C., the $2 billion VinFast electrical vehicle plant in New Hill, N.C., and the $1.4 billion Midfield Satellite Concourse at Los Angeles International Airport.
Residential Construction Starts
Residential building starts dropped by 1% in August to a seasonally adjusted annual rate of $418 billion. Single-family starts gained 2%, and multifamily starts lost 5%. Year-to-date, total residential starts were down 18%. Single-family starts were 21% lower, while multifamily starts were down 12%.
The largest multifamily structures to break ground in August were the $530 million Hub on Campus mixed-use building in Knoxville, Tenn., the $425 million 250 Water Street mixed-use tower in New York, and the $340 million Ritz Carlton residences in North Palm Beach, Fla.