All three major construction sectors declined in September as total construction starts fell 6% to a seasonally adjusted annual rate of $1.2 trillion. According to Dodge Construction Network (DCN), nonresidential starts dropped by 4%, residential starts declined by 6% and nonbuilding starts fell by 9%.
Year-to-date, total construction starts are down 3% compared to last year. Residential and nonresidential starts are down 17% and 7%, respectively. The reasons for the declines, says DCN chief economist Richard Branch, are that risks continue to increase for the construction industry.
“Over the last 12 months, construction starts have essentially frozen as rates increased and credit tightened,” he says. “The industry needs further adjusting as rates are expected to stay higher for longer, along with the potential for higher energy costs and continued political uncertainty. Returning to broad-based growth in construction starts is still some time away.”
Nonresidential
Nonresidential building starts fell 4% in September to a seasonally adjusted annual rate of $459 billion. Commercial starts rose 6%, and institutional starts fell 8%. Year-to-date, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 5%, while commercial and manufacturing starts fell 6% and 31%, respectively.
The largest nonresidential building projects to break ground in September were the $2.5 billion Hyundai/SK EV battery plant in Cartersville, Ga., a $1.1 billion prison in Elmore, Ala., and the $1 billion Microsoft data center in Mount Pleasant, Wis.
Residential
Residential building starts fell 6% in September to a seasonally adjusted annual rate of $394 billion. Single-family starts gained 1%, while multifamily starts lost 17%. Year-to-date, total residential starts were down 17%. Single-family starts were 19% lower, and multifamily starts were down 12%.
The largest multifamily structures to break ground in September were the $385 million first phase of the South Pier Residential Towers in Tempe, Ariz., the $275 million first phase of the Casa Bella Condominiums in Miami, and the $260 million Chapel Block mixed-use development in Philadelphia.
