Construction Shows Growth in Nonbuilding and Nonresidential Sectors

Construction technology
Published On
Nov 23, 2021

Total construction starts pushed 16% higher in October to a seasonally adjusted annual rate of $1.01, according to Dodge Data & Analytics’ Dodge Construction Network. Nonbuilding starts rose 52%, nonresidential building starts gained 29% and residential starts lost 8%.

Nonbuilding construction starts rose 52% to a seasonally adjusted annual rate of $268.4 billion, which was led largely by an increase in the utility/gas plant category. The public works side of nonbuilding construction was in the negative category, with miscellaneous nonbuilding starts falling 43% over the month and highway/bridge and environmental public works starts losing 14% and 16%, respectively.

Year-to-date, total nonbuilding starts were 2% higher through October. Environmental public works were 23% higher and utility/gas plant starts were up 14%. During the same time, highway and bridge starts were 7% lower, miscellaneous nonbuilding fell 13% and utility/gas plant starts fell 10%.

Nonresidential building starts increased 29% higher in October to a seasonally adjusted annual rate of $357.2 billion. This was due to a large gain in the manufacturing sector. In October, commercial starts lost 4%, with only hotels posting a gain. Institutional starts gained 4%, with all categories rising.

Year-to-date, nonresidential building starts were 11% higher. Commercial starts increased 9%, manufacturing starts were 94% higher and institutional starts were up 3%.

“Economic growth has resumed following the third quarter’s Delta-led slowdown,” said Richard Branch, chief economist for Dodge Construction Network. “However, the construction sector’s grip on growth remains tenuous. Long-term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill. Both will provide meaningful support and growth to construction in the year to come. This expectation, however, must be tempered by the significant challenges facing the industry: high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to full recovery.”

Residential building starts fell 8% in October to a seasonally adjusted annual rate of $388.6 billion. Starts for single-family homes gained less than 1%, while multifamily starts (which includes apartment buildings and condos) fell 24%.

Year-to-date, residential starts were 21% higher, with single-family starts gaining 22% and multifamily starts gaining 10%.

A report from the National Association of Home Builders (NAHB) confirms the struggles with residential construction.

According to NAHB, single-family housing production lagged in October due to supply chain effects for materials and ongoing access issues for labor and lots. Overall housing starts decreased 0.7% to a seasonally adjusted annual rate of 1.52 million units. Within this overall number, single-family starts decreased 3.9% to a 1.04 million seasonally adjusted annual rate, but are up 16.7% year-to-date. The multifamily sector increased 7.1% to an annualized 481,000 pace.

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