The number of total construction starts declined by 27% in January, reports the Dodge Construction Network (DCN).

The decline offsets a 27% increase in project starts in December, fueled by manufacturing and infrastructure construction. DCN’s chief economist Richard Branch says that the drop should not be considered a downturn in the industry.

“Numerous mega-projects have begun over the last few months, obscuring the underlying trend in construction activity,” he says. “While some construction sectors will face stress as the year progresses, current fundamentals point to an industry fairly well positioned to weather the storm.”

During January, nonresidential building starts fell 38%, and residential starts lost 20%. Year-to-year, total construction was 14% lower in January 2023 than in January 2022, nonresidential building starts decreased by 2% and residential starts lost 34%.

For the 12 months ending January 2023, total construction starts were 13% higher than the 12 months ending January 2022. Nonresidential starts were 36% higher, while residential starts lost 6%,

Nonresidential Building Starts 

This sector declined 38% in January to a seasonally adjusted annual rate of $340 billion. Manufacturing starts led the pullback in January, falling 91% after the start of several large projects in December. In January, commercial starts dropped 11%, with office projects the only category to post a gain, while institutional starts increased by 3% due to a gain in education starts.

For the 12 months ending January 2023, total nonresidential building starts were 36% higher than the 12 months ending January 2022. Manufacturing starts were 190% higher, commercial starts gained 22% and institutional starts moved 17% higher on a 12-month rolling sum basis.

The largest nonresidential building projects to break ground in January were the $1 billion Prime Data Center campus in Elk Grove Village, Ill., the $515 million Amazon data center in Hilliard, Ohio, and the $460 million CoStar Group corporate campus in Richmond, Va.

Residential Building Starts 

The DCN reports this sector fell 20% in January to a seasonally adjusted annual rate of $289.2 billion. Single-family starts lost 5%, and multifamily starts fell 37%. For the 12 months ending in January 2023, residential starts were 5% lower than the 12 months ending in January 2022, single-family starts were 16% lower, while multifamily starts were up 21%.

The largest multifamily structures to break ground in January were a $200 million mixed-use building in Gowanus, N.Y., a $172 million mixed-use building in Greenpoint, N.Y., and the $150 million The Cove residential community in Sacramento.