The value of new construction starts in April fell 13 percent from the previous month to a seasonally adjusted annual rate of $674.3 billion, according to Dodge Data & Analytics. The decline follows the 11-percent gain reported for March, which was the highest level of construction starts over the preceding six months.

The loss of momentum in April was widespread, involving each of the three main construction sectors. Nonresidential building retreated 12 percent due to a slower pace by its institutional and manufacturing segments. Residential building dropped 9 percent with reduced activity for both single family and multifamily housing.

During the first four months of 2018, total construction starts on an unadjusted basis were $223.5 billion, down 7 percent from the same period of 2017 (which included very strong amounts for airport terminals and natural gas pipelines). On a 12-month moving total basis, total construction starts for the 12 months ending April 2018 matched the dollar amount that was reported for the 12 months ending April 2017.

“The construction start statistics can be volatile on a monthly basis, and given the wide swings present in March and April it’s probably best to take the average of the two months in assessing the current health of the construction industry,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “The average for March and April shows that construction starts so far in 2018 are proceeding slightly behind last year’s average pace. Even with this modest slowdown in early 2018, there are several factors in the current environment that should help construction activity to stay close to recent levels. Job growth continues to be strong, with the unemployment rate at the lowest level since 2000, which should limit any upward movement by commercial vacancy rates this year. In its latest quarterly survey of bank lending standards, the Federal Reserve indicated that lending standards for nonresidential building projects eased slightly on net during the first quarter of 2018, following the tightening that took place from late 2015 through 2017. In March, Congress reached agreement on fiscal 2018 appropriations, providing additional funding for several public works programs. And, while interest rates are rising, the upward movement so far has been measured, with the ten-year Treasury bill stabilizing at about 3 percent from March through mid-May.”

Nonresidential building in April was $211.5 billion (annual rate), down 12 percent from March. The institutional side of nonresidential building decreased 12 percent in April, sliding for the second month in a row. The commercial building categories as a group provided a relative bright spot for nonresidential building in April, rising 5 percent after a 15 percent decline in March.