Volatility in the construction industry contributed to a decline in total construction starts in November, states the Dodge Construction Network (DCN). The organization reports total construction starts dropped 18% in November to a seasonally adjusted annual rate of $926.3 billion. Additionally, nonresidential building starts fell 25%, and residential starts dropped 5%.
Despite the decline, total construction starts were 14% higher in the first 11 months of 2022 compared to the same period in 2021. Nonresidential building starts rose 36% over the year, and residential starts were down 1%.
“Month-to-month volatility in construction activity continues to reign supreme as uncertainty mounts over the economy in 2023,” says Richard Branch, chief economist for DCN. “Higher interest rates and fear of recession are first and foremost on the mind of most builders and developers, potentially restraining starts activity. However, as some material prices head lower and more public dollars come into the market for infrastructure and manufacturing projects, the year is ending with a fair bit of momentum. Next year will be a challenge, but nothing like the sector faced during the Great Recession.”
The DCN reports that nonresidential building starts fell 25% in November to a seasonally adjusted annual rate of $361.6 billion. Commercial starts fell by 33%, institutional starts decreased by 12%, and manufacturing declined by 69%. The only categories to show a gain on a month-to-month basis were healthcare, public buildings, religious and recreation starts. Through the first 11 months of 2022, nonresidential building starts were 36% higher than in the first 11 months of 2021. Commercial starts grew 25%, and institutional starts rose 19%. Manufacturing starts were 160% higher on a year-to-date basis.
The largest nonresidential building projects to break ground in November were the $1.1 billion Harbor-UCLA Medical Center in Torrance, Calif., the $800 million Project Velvet Meta data center in Kansas City and the $500 million Eli Lilly manufacturing campus in Concord, N.C.
Residential building starts fell 5% in November to a seasonally adjusted annual rate of $346.5 billion. Single-family starts lost 9%, while multifamily starts gained 1%. Through the first 11 months of 2022, residential starts were 1% lower compared to the same time frame in 2021. Multifamily starts were up 26%, while single-family housing slipped 12%.
The largest multifamily structures to break ground in November were the $345 million 601 N. Central Ave. mixed-use building in Phoenix, the $350 million YMCA of Middle Tennessee residential tower in Nashville, and the $250 million Halletts Point (Building 3) in Astoria, N.Y.