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New construction starts in March increased 5 percent to a seasonally adjusted annual rate of $743.7 billion, marking the third straight monthly gain, according to Dodge Data & Analytics. While growth was led by the nonbuilding sector, nonresidential building held steady with its February pace, and residential building in March registered moderate growth.
Through the first three months of 2017, total construction starts on an unadjusted basis were $160.1 billion, down 3 percent from the same period a year ago. If the often volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts during the first three months of 2017 would be up 8 percent relative to last year.
The March data produced a reading of 157 for the Dodge Index, compared to 149 in February and 147 in January. After sliding to a weak 129 in December, the index over the next three months bounced back 22 percent. On a quarterly basis, the index averaged 151 during this year’s January-March period, up 9 percent compared to the 139 average for the fourth quarter of 2016.
“The pattern for construction starts in early 2017, with three straight monthly gains, is the reverse of the three straight monthly declines that closed out 2016,” says Dodge chief economist Robert A. Murray.
Residential building, at $310.8 billion (annual rate), grew 4 percent in March. Multifamily housing provided the upward push, rebounding 26 percent after a 23-percent setback in February. Six multifamily projects valued at $100 million or more reached groundbreaking in March.
Nonresidential building in March, at $237.2 billion (annual rate), was essentially unchanged from its February pace. The institutional side of the nonresidential building market grew 3 percent in March, with much of the support coming from an 83-percent surge for the transportation terminal category.
Also strengthening in March were religious buildings, up 9 percent, and public buildings (courthouses and detention centers), up 4 percent. On the negative side, educational facilities in March dropped 14 percent after February’s 11-percent gain. Also retreating in March was the amusement and recreational category, which fell 29 percent.
The commercial side of the nonresidential building market increased 7 percent in March, showing improvement after a 10-percent drop in February. Office construction climbed 41 percent, lifted by the start of five projects valued each in excess of $100 million.
The 3-percent decline for total construction starts on an unadjusted basis during the first three months of 2017 relative to last year was due to a varied pattern by major sector. Residential building slipped a modest 1 percent year-to-date, with multifamily housing down 18 percent while single-family housing grew 9 percent. Nonresidential building registered a 7-percent gain year-to-date, with institutional building up 35 percent and commercial building down 9 percent.
