Total construction starts declined 5% from February to March to a seasonally adjusted annual rate of $746.9 billion. Volatility caused by the presence or absence of large projects in healthcare and the utility/gas plant category, however, skewed the analysis. In March, nonresidential building starts fell 9% from February (seasonally adjusted), while residential building dropped 11%. Nonbuilding construction starts, however, rose 14% during the month.
For the 12 months ending March 2020, total construction starts were 2% higher than they were for the same period ending March 2019. Residential building starts were 3% higher, while nonbuilding starts were up 5% for the 12 months ending March 2020. Nonresidential building starts, however, were down less than 1%.
“Considering the calamity that occurred toward the end of March as the fallout from COVID-19 hit the economy, construction starts held up rather well,” says Richard Branch, chief economist for Dodge Data & Analytics. “Construction starts in March were unlikely to be greatly impacted as projects that broke ground during the month likely had materials sourced and in-place and labor booked well ahead of the scheduled groundbreaking. That momentum and planning is difficult to reverse at the last minute. Additionally, most of the stay-at-home orders and construction moratoriums were not instituted until the last week of the month and into April. Therefore, April construction starts are likely to be a very different story with states like New York, New Jersey and Pennsylvania, among others, banning construction activity. April’s starts data will be the first true indication of how the crisis will impact the construction industry.”
Nonresidential building starts fell 9% from February to March to a seasonally adjusted $259.8 billion. Commercial building starts were 5% lower, with losses in three of the five commercial sub-categories (warehouses and parking structures made gains). Manufacturing buildings dropped 7% during the month, while institutional buildings dropped 12%. Institutional buildings posted a large gain in February due to the start of several large healthcare facilities, which were not present in the March statistics. However, education facilities posted a solid 18% gain in March.
On a 12-month total basis, nonresidential building starts were less than one percentage point lower than they were for the 12 months ending March 2019. Commercial starts were up 2%, while institutional building starts were 1% lower and manufacturing starts were down 7%.