Construction Starts Slow in June Driven by Uncertainty in Economy

Driven by a decrease in nonresidential building starts, the total number of construction starts fell 5% in June to a seasonally adjusted annual rate of $932.3 billion, according to the Dodge Construction Network.

Nonresidential building starts lost 14% during June and residential starts fell by 6%. However, nonbuilding starts gaining 13% in June thanks to several large solar projects.

“Construction markets are getting jittery as the odds of recession increase,” said Richard Branch, chief economist for Dodge Construction Network. “While projects are still moving through the planning process, the velocity has downshifted reflecting uncertainties over how rising interest rates will impact the economy, construction material prices, and ultimately, construction starts. Over the short-term, construction-facing indicators are likely to be more volatile than normal, particularly in the commercial sector.”

The Dodge Construction Network reported that total construction was 5% higher year-to-date in the first six months of 2022 compared to around the same time in 2021.

Nonresidential building starts rose 13% and residential starts gained 3%, while nonbuilding starts were 2% lower. For the 12 months ending June 2022, total construction starts were 7% above the 12 months ending June 2021. Nonresidential starts were 17% higher, residential starts gained 5% and nonbuilding starts were down 2%.

The largest nonresidential building projects to break ground in June were an $800 million Facebook data center in Los Lunas, N.M., the $400 million Exxon LaBarge carbon capture plant in Fontenelle, Wyo., and the $287 million first phase of the Houston Methodist Cypress Bed hospital tower in Cypress, Texas.

The largest multifamily structures to break ground in June were the $450 million Neptune/Sixth mixed-use project in Brooklyn, N.Y., the $425 million 250 Water Street apartments in New York, N.Y, and the $369 million 5th & Colorado mixed-use building in Austin, Texas.

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