Some Gains, Some Losses in New Construction Starts, According to Dodge

Published On
Jul 26, 2021

According to a report from Dodge Data & Analytics, Hamilton, N.J., total construction starts lost 7% overall in June over May. In fact, all three major sectors (nonbuilding, nonresidential building and residential building) lost ground during the month. In addition, construction starts lost ground in all regions of the nation, except the Northeast, which saw a slight increase.

Nonbuilding construction

Nonbuilding construction starts dropped 13% in June. While total nonbuilding starts, excluding the utility/gas plant category, rose 3% primarily through gains in environmental public works and miscellaneous nonbuilding, it was a precipitous 63% drop in the utility/gas plant category (which had actually seen a large increase in May) that brought this sector down so much. Adding to the decline was a 7% drop in highway and bridge starts.

During the first six months of 2021, total nonbuilding starts were up 4%, led by environmental public works projects, which surged 35%, followed by utility/gas plant projects, which gained 13%. However, highway and bridge starts dropped 9% during this time, and the miscellaneous nonbuilding segment dropped 6%.

Total nonbuilding starts for the 12 months ending in June 2021 were 6% lower than the 12 months ending in June 2020, despite environmental public works starts being 23% higher. Utility and gas plant starts were 20% lower.

Nonresidential building

Nonresidential building starts lost 7% overall in June. While large healthcare and manufacturing projects saw a significant increase in May, there was an absence of similar projects in June, which led to normalized starts activity. Manufacturing starts lost a whopping 62%, and institutional starts lost 9%. However, commercial starts (in all categories) rose 12%.

Nonresidential building starts for the first six months of 2021 were somewhat above those of the first six months of 2020, with manufacturing starts posting gains of 36%, and commercial starts showing a 7% increase.

For the 12 months ending in June 2021, nonresidential building starts were down 14% compared to the 12 months ending June 2020. In specific, manufacturing starts dropped 42%, commercial starts dropped 18% and institutional starts dropped 10%.

Residential building

Residential building starts decreased 5% in June. In specific, single-family starts fell by 8%, while multifamily starts went up by 2%.

During the first six months of 2021, residential building starts were 32% higher than the first six months of 2020. During this time, single-family and multifamily starts rose, going up by 37% and 19%, respectively.

Total residential starts were 22% higher in the 12 months ending in June 2021 than in the 12 months ending in June 2020, with gains for single-family starts (29%) and multifamily starts (5%).

According to Richard Branch, chief economist for Dodge Data & Analytics, the nascent recovery in nonresidential buildings has continued as projects pile up in the planning stages.

“These mixed signals coming from both residential and nonresidential construction starts suggest that recovery from the pandemic will remain uneven in coming months as rising materials prices and labor shortages weigh on the industry,” he said.

He added, “Unabated materials price inflation has driven a significant deceleration in single family construction. Lumber futures have eased in recent weeks, but builders are unlikely to see much relief over the short-term, meaning building costs will continue to negatively influence the housing industry.”

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