Total construction starts fell 6 percent in September to a seasonally adjusted annual rate of $1.2 trillion, according to Dodge Construction Network. Nonresidential starts lost 4 percent, residential starts declined 6 percent, and nonbuilding starts fell 9 percent.
Year-to-date through September, total construction starts were 3 percent below that of 2022. Residential and nonresidential starts were down 17 percent and 7 percent; however, nonbuilding starts were up 25 percent on a year-to-date basis. For the 12 months ending September, total construction starts were unchanged. Nonbuilding starts were 22 percent higher, and nonresidential building starts gained 3 percent. Conversely, on a 12-month rolling basis, residential starts posted a 16 percent decline.
“Risks continue to mount for the construction sector,” says Richard Branch, chief economist at Dodge Construction Network. “Over the last 12 months, construction starts have essentially froze as rates increased and credit tightened. 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. A return to broad-based growth in construction starts is still some time away.”
Nonbuilding construction starts decreased in September, falling 9 percent to a seasonally adjusted annual rate of $345 billion. Highway and bridge starts lost 15 percent and environmental public works starts fell 29 percent. Not all sectors fell, however: miscellaneous nonbuilding starts rose 4 percent, and utility/gas plant starts gained 14 percent. Year-to-date through September, nonbuilding starts were up 25 percent. Utility/gas plants rose 58 percent, and miscellaneous nonbuilding starts were up 23 percent. Highway and bridge starts gained 13 percent, and environmental public works rose 16 percent.
For the past 12 months ending in September, total nonbuilding starts were 22 percent higher than that of September 2022. Utility/gas plant and miscellaneous nonbuilding starts rose 35 percent and 22 percent. Highway and bridge starts, in addition to environmental public works starts, were both up 18 percent on a 12-month rolling sum basis.
The largest nonbuilding projects to break ground in September were the $4.5 billion Sun Zia transmission line across Arizona and New Mexico, the $525 million fourth phase of Cedar Springs wind farm in Converse County, Wyo., and $485 million Prospect Lake Clear Water Center in Fort Lauderdale, Fla.
Nonresidential building starts fell 4 percent in September to a seasonally adjusted annual rate of $459 billion. Commercial starts rose 6 percent due to strength in data center work (classified as an office structure in the Dodge database) and retail. Institutional starts fell 8 percent in September despite a healthy gain in education starts, and manufacturing starts declined 13 percent. On a year-to-date basis through September, total nonresidential starts were 7 percent lower than that of 2022. Institutional starts gained 5 percent, while commercial and manufacturing starts fell 6 percent and 31 percent.
For the past 12 months ending in September, total nonresidential building starts were 3 percent higher than that ending September 2022. Manufacturing starts were 8 percent lower. Institutional starts improved by 8 percent, and commercial starts gained 4 percent.
The largest nonresidential building projects to break ground in September were a $2.5 billion Hyundai/SK EV battery plant in Cartersville, Ga., $1.1 billion prison in Elmore, Ala., and $1 billion Microsoft data center in Mount Pleasant, Wis.
Residential building starts fell 6 percent in September to a seasonally adjusted annual rate of $394 billion. Single family starts gained 1 percent, while multifamily starts lost 17 percent. On a year-to-date basis through September, total residential starts were down 17 percent. Single family starts were 19 percent lower, and multifamily starts were down 12 percent.
For the past 12 months ending in September, residential starts were 16 percent lower than in 2022. Single family starts were 22 percent lower, while multifamily starts were down 5 percent on a rolling 12-month basis.
Regionally, total construction starts in September fell in the Northeast, Midwest, South Atlantic and West regions, but rose modestly in the South Central region.
