Archive and Content Search
The value of new construction starts in September decreased 2 percent to a seasonally adjusted annual rate of $703.7 billion, according to Dodge Data & Analytics. This follows the 22-percent jump for total starts in August, which is the highest monthly pace so far in 2016.
Nonresidential building showed further strength in September, exceeding its elevated August amount. The lift for nonresidential building in September came from the start of two very large office towers in New York City, as well as eight large hospital projects.
Through the first nine months of 2016, total construction starts on an unadjusted basis were $506.7 billion, trailing the same period a year ago by 3 percent.
The September data produced a reading of 149 for the Dodge Index, down from an upwardly revised 152 for August. September was still fairly high by recent standards, coming in 6 percent above the average of the previous eight months.
“Whether looking at construction starts month-to-month or quarter-to-quarter, the past two years have shown considerable volatility, reflecting in part when very large projects were entered as construction starts,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “The first two quarters of 2015 included 13 very large projects valued each at $1 billion or more, followed by only one such project in last year’s third quarter. The current year has assumed a ‘mirror image’ quality with respect to the timing of very large projects – only four were entered as construction starts during this year’s first two quarters, but in the just completed third quarter six such projects were entered as construction starts. When combined with the more broad-based strengthening for construction that’s taken place in this year’s August and September, and with the comparison to the subdued activity for the same two months a year ago, the year-to-date shortfall for total construction starts has become considerably smaller than what was reported earlier in the year.”
Nonresidential building in September increased 5 percent to $282.3 billion (annual rate). The increase was led by a 148-percent jump for office construction. On the negative side, hotel construction in September retreated 30 percent after its substantial August gain.
As a group, the commercial categories in September registered a 37-percent increase, after the 31-percent gain reported in August. The improved levels for commercial building in August and September followed a lackluster amount of construction starts during the previous four months.
The institutional side of the nonresidential market advanced 8 percent in September. Much of the lift came from a strong volume for healthcare facilities which climbed 57 percent. New education facility projects grew 4 percent in September.
Residential building, at $271.1 billion (annual rate), fell 8 percent in September. Multifamily housing retreated after a strong performance in August, falling 17 percent.
The 3-percent decline for total construction starts on an unadjusted basis during the first nine months of 2016 was due to a mixed pattern by major sector. Nonresidential building year-to-date was down a slight 2 percent, with commercial building up 10 percent and institutional building even with last year. Residential building year-to-date advanced 5 percent, with single family housing up 7 percent while multifamily housing was unchanged.
By geography, total construction starts during the January-September period of 2016 revealed these changes compared to the same period a year ago – the Midwest, up 9 percent; the South Atlantic, up 7 percent; the West, up 5 percent; the Northeast, down 5 percent; and the South Central, down 22 percent.
