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Dive brief:
- Total construction starts fell another 7% in October to a seasonally adjusted annual rate of $1.1 trillion, according to the Dodge Construction Network, due to a widespread slowdown in gas projects and public services.
- According to the report, the decline makes the current year’s overall construction starts through October to follow last year’s pace by 4%. It also continues to decline The contraction of 6% in Septembermarking two consecutive months of losses.
- “Construction starts have weakened over the past two months as high interest rates and tight credit have dampened activity,” said Richard Branch, chief economist at Dodge Construction Network. “While the Federal Reserve seems likely to hold off on further rate hikes, it will take time before they consider easing. This will likely result in a continued softening of construction starts over the coming months.”
Diving knowledge:
While the report begins construction, measuring projects that have progressed, the American Institute of Architects’ Architecture Billing Index tracks building design work for future jobs. This index, which leads real construction nine to 12 months, it continued to soften in October too.
This means that not only are invoices to businesses decreasing, but fewer clients are committing to new projects, according to the report. In addition, turnover was universally soft across the country in October, with businesses located in the West and Northeast continuing to report weaker conditions overall for the second month in a row.
3 megaprojects boost non-residential starts
One bright spot was non-residential starts. The category includes commercial, institutional and manufacturing projects and rose 8% in October to a seasonally adjusted annual rate of $490 billion. mainly due to manufacturing activity.
Without these megaprojects, startups in the category would have lost 28%, according to Dodge. Commercial starts, which include retail, office and warehouse projects, fell 18% in October due to a sharp decline in office activity. Meanwhile, institutional starts, which include health and education projects, also fell 15%.
In the year to October, total non-residential starts remained 7% lower than in 2022, the report said.
The largest non-residential projects that broke ground in October included:
- Micron’s $7.5 billion semiconductor manufacturing facility in Boise, Idaho.
- The $2.2 billion Hyundai and LG EV battery plant in Ellabell, Georgia.
- The $1.5 billion Nucor sheet mill in Apple Grove, West Virginia.
The unbuildable begins after a surprising fall
A decline in gas plant starts and utilities pushed nonbuilding construction starts to fall 32% in October, the lowest in 12 months.
However, despite the massive retreat, highway and bridge starts managed to improve by 6% in October, the report said.
Year to October, non-construction starts continue to show resilience. The sector continues to grow by 20% overall during this period, according to the report.
The largest non-building projects that began work in October included:
- The $319 million Newton-Weston Bridge replacement in Newton, Massachusetts.
- The $300 million Cadence Solar Center in York Township, Ohio.
- Estonia’s $280 million solar project in Cooper, Texas.
Residential starts a few inches lower again
After two straight months of declines, residential building starts fell again in October by 1% to a seasonally adjusted annual rate of $385 billion, according to Dodge.
Single-family starts lost 2%, while multi-family starts remained stable. In the year to October, total housing starts fell 15%. Meanwhile, single-family and multi-family starts were down 17% and 12%, respectively.
The largest multifamily structures that broke ground in October included:
- The $364 million QPX mixed-use tower in Long Island City, New York.
- The $350 million mixed-use building on West 37th Street in New York City.
- The $225 million first phase of the Baccarat Residences in Miami.
