According to Dodge Construction Network, total construction starts fell 15% in November, dropping to a seasonally adjusted annual rate of $927 billion.

Total construction starts fell considerably in November, with a 29% decrease in nonresidential building starts. According to Dodge Construction Network (DCN), total construction starts fell 15% in November, dropping to a seasonally adjusted annual rate of $927 billion.

DCN chief economist Richard Branch says the decline was a result of higher rates.

“Construction starts are deeply feeling the impact of higher rates,” he explains. “While the Federal Reserve seems poised to start cutting rates in the New Year, the impact on starts will lag. As a result, starts are expected to be weak through the mid-point of 2024 before growth resumes.”

Year-to-date, total construction starts were down 4% compared to last year. Residential and nonresidential starts were down 14% and 7%, respectively.

Regionally, November total construction starts fell in the Midwest, South Atlantic, South Central and West regions but rose in the Northeast.

Nonresidential

DCN data shows that nonresidential building starts decreased by 29% to a seasonally adjusted annual rate of $345 billion. Manufacturing starts suffered the worst of the declines, falling 74%. Commercial starts fell 19%, with office buildings the only category to gain. Institutional starts rose 7% due to a significant uptick in healthcare activity. Year-to-date through November, institutional starts increased 5%, while commercial and manufacturing starts fell 13% and 18%, respectively.

The largest nonresidential building projects to break ground in November were the $1.9 billion Children’s Hospital of Philadelphia Inpatient Tower, the $1.6 billion LG Energy Battery Plant in Queen Creek, Ariz., and the $750 million expansion of the Iowa Army Ammunition Plant in Middletown, Iowa.

Residential

Residential building starts dropped 6% in November to a seasonally adjusted annual rate of $359 billion. Single-family starts increased 1%, while multifamily starts fell 19%. Year-to-date through November 2023, single-family starts dropped 15% and multifamily starts by 12%.

The largest multifamily structures to break ground in November were the $200 million 55 Broad Street residential conversion in New York City, the $200 million redevelopment of The Superman Building in Providence, R.I., and the $185 million Union West mixed-use development in Raleigh, N.C.

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