Nonresidential building starts dropped 16% in February, while residential starts fell by 2%.

According to Dodge Construction Network (DCN), total construction starts fell 8% in February to a seasonally adjusted annual rate of $1.07 trillion. Nonresidential building starts dropped 16%, and residential starts fell by 2%.

Year-to-year, total construction starts were up 2%. Nonresidential building starts were down 2%, while residential starts were 4% lower.

“Construction activity was hit hard by higher rates and more restrictive credit standards,” said Richard Branch, DCN’s chief economist. “Starts struggled over the past several months as the lagged effect of higher rates impacted projects moving forward through the planning process. The significant deficit of skilled labor also led to further delays–especially in the manufacturing sector. While optimism should prevail in the second half of the year as the Federal Reserve begins to cut rates, some sectors, like commercial, will make little headway over the remainder of the year.”

Nonresidential

Nonresidential building starts fell 16% in February to a seasonally adjusted annual rate of $407 billion. Institutional starts were down 19% due to a decline in transportation and education projects. Commercial starts lost 3% due to a pullback in warehouse starts, while manufacturing starts were down 28%.

Year-to-year, nonresidential building starts were 2% lower than the previous 12 months. Manufacturing starts were down 13%, commercial starts were down 8%, and institutional starts were 9% higher for the 12 months ending February 2024.

The largest nonresidential building projects to break ground in February were the $1.8 billion Redwood Materials Battery Recycling Facility in Ridgeville, South Carolina, the $1.6 billion LG Chemical Battery Plant in Clarksville, Tennessee, and the $1.2 billion Hollywood Burbank Airport replacement project in Los Angeles.

Residential

Residential building starts declined 2% in February, falling to a seasonally adjusted annual rate of $392 billion. Single-family starts improved by 5%, while multifamily starts fell 12%.

Residential starts were 4% lower than the previous 12 months. Single-family starts were 2% less, while multifamily starts fell 6%.

The largest multifamily structures to break ground in February were the $500 million 400 Lake Shore Drive North Tower in Chicago, the $400 million Alia at 888 Ala Moana building in Honolulu, and a $200 million mixed-use development in Gowanus, New York.

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