Total Construction Starts Bolstered by Infrastructure Projects in October, Mixed Bag in Some Sectors

By Katie Kuehner-Hebert | Dec 1, 2022
Construction Employment on the Rise
Total construction starts rose 8% in October to a seasonally adjusted annual rate of $1.12 trillion, according to a November 2022 report from Dodge Construction Network. 

Inflationary pressures continue to take a toll on new construction projects, but some sectors, particularly manufacturing and infrastructure, are buoyed by government spending.

Total construction starts rose 8% in October to a seasonally adjusted annual rate of $1.12 trillion, according to a November 2022 report from Dodge Construction Network. In October, nonresidential building starts gained 9% and nonbuilding starts rose 26%, but residential starts fell by 3%.

Year-to-date, total construction was 16% higher in the first 10 months of 2022 compared to the same period in 2021. Nonresidential building starts rose 37% over the year, residential starts remained flat and nonbuilding starts were up 17%.

“It’s true that inflation and high interest rates are impacting construction across the board,” said Richard Branch, Dodge Construction Network’s chief economist. “We see this most evidently in the single-family market, where construction starts have fallen sharply. It’s not that nonresidential and infrastructure projects are not impacted¾rising prices and interest rates impact any project requiring land or materials.”

What separates the residential market from sectors such as manufacturing and infrastructure is support from federal legislation. 

“Going forward, infrastructure projects will have significant gains fueled by the Infrastructure Investment and Jobs Act, while other sectors like manufacturing and electric power will also see gains thanks to the Creating Helpful Incentives to Produce Semiconductors for America Act and the Inflation Reduction Act,” Branch said.

Nonbuilding construction starts rose 26% in October to a seasonally adjusted annual rate of $277.7 billion. Highway and bridge starts rose 57%, while utility/gas plants increased 19% and environmental public works were 13% higher. This growth is tempered, as miscellaneous nonbuilding starts fell 20% in the month. Through the 10 months of the year, total nonbuilding starts were 17% higher than in 2021. Highway and bridge starts were 25% higher, environmental public works were 14% higher and miscellaneous nonbuilding starts increased 17% on a year-to-date basis. Utility/gas plant starts were flat.

The largest nonbuilding projects to break ground in October were the $576 million Texas Department of Transportation’s (DOT) Interstate Highway 820 reconstruction project in Fort Worth, the $548 million Texas DOT Interstate Highway 35 widening project in Austin and the $364 million repaving project in Honolulu.

Nonresidential building starts rose 9% in October to a seasonally adjusted annual rate of $480.5 billion. During the month, commercial starts rose 19%, led by office and hotel projects. Institutional starts rose 8% due to a surge in education projects, while manufacturing starts fell by 5%. Through the first 10 months of 2022, nonresidential building starts were 37% higher than the first 10 months of 2021. Commercial starts grew 23%, and institutional starts rose 21%. Manufacturing starts were 157% higher on a year-to-date basis.

The largest nonresidential building projects to break ground in October were the $3.2 billion Texas Industries chip fabrication plant (building 1) in Sherman, Texas; the $2 billion General Motors Orion EV plant in Orion Township, Mich.; and the $1 billion Gevo Net-Zero 1 hydrocarbon plant in Lake Preston, S.D.

Residential building starts fell 3% in October to a seasonally adjusted annual rate of $366.4 billion. Single-family starts lost 3%, while multifamily starts dropped 4%. Through the first 10 months of 2022, residential starts were flat when compared to the same time in 2021. Multifamily starts were up 26%, while single-family housing slipped 10%.

The largest multifamily structures to break ground in October were the $564 million Long Island City Center II in Long Island City, N.Y.; the $450 million Waldorf Astoria residences and hotel in Miami; and the $167 million Modera McGavock mixed-use building in Nashville, Tenn.

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

About The Author

KUEHNER-HEBERT is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience. Reach her at [email protected].  





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