New construction starts declined 11% in October to a seasonally adjusted annual rate of $696.3 billion, according to Dodge Data & Analytics. This is the third consecutive monthly drop in construction starts activity. By major sector, nonresidential building starts fell 20% from September to October and nonbuilding starts dropped 14%, while residential starts moved 2% lower.
Through the first ten months of the year, total construction starts were 4% lower than in the same period of 2018. Both residential and nonresidential construction starts were down through ten months, although nonbuilding starts remained on the plus side due to gains in electric utilities/gas plants and environmental public works.
“Concern over the health of the U.S. economy continues to play a key role in the pullback in starts over the past few months,” says Richard Branch, chief economist for Dodge Data & Analytics. “However, solid real estate fundamentals (such as vacancy rates) in addition to stable public funding will continue to support a modest level of construction activity across both public and private projects.”
Nonresidential building starts lost 20% over the month in October, falling to $225.8 billion (at a seasonally adjusted annual rate). This steep decline comes after a very strong September that saw two projects valued at nearly $1 billion break ground — a consolidated rental car facility in Los Angeles and a large manufacturing complex in Detroit. In October, commercial starts fell 3% with gains in the office and hotel sectors muting the downturn. Manufacturing starts peeled back 69% and institutional starts moved 20% lower.