Monthly Construction Starts Plummet in November but Year-to-Date Activity Still Holding Up

Total construction starts fell -18% in November to a seasonally adjusted annual rate of $926.3 billion, according to Dodge Construction Network. During the month, nonresidential building starts lost -25%, nonbuilding shed -21%, and residential starts dropped -5%. Year-to-date, total construction starts were +14% higher in the first 11 months of 2022 compared to the same period of 2021. Nonresidential building starts rose +36% over the year, residential starts were down -1%, and nonbuilding starts were up +16%.

“Month-to-month volatility in construction activity continues to reign supreme as uncertainty mounts over the economy in 2023,” said Richard Branch, chief economist for Dodge Construction Network, in the press release. “Higher interest rates and fear of recession are first and foremost on the mind of most builders and developers, and potentially restraining starts activity. However, as some material prices head lower and more public dollars come into the market for infrastructure and manufacturing projects, the year is ending with a fair bit of momentum. Next year will be a challenge, but nothing like the sector faced during the Great Recession.”

Nonresidential building starts fell -25% in November to a seasonally adjusted annual rate of $361.6 billion. In November commercial starts fell -33%, institutional starts were -12% lower, and manufacturing dropped -69%. Within the entire nonresidential building sector, the only categories to show a gain on a month-to-month basis were healthcare, public buildings, religious, and recreation starts. Through the first 11 months of 2022, nonresidential building starts were +36% higher than the first 11 months of 2021. Commercial starts grew +25%, and institutional starts rose +19%. Manufacturing starts were +160% higher on a year-to-date basis.

The largest nonresidential building projects to break ground in November were the $1.1-billion Harbor-UCLA Medical Center in Torrance, CA; the $800-million Project Velvet Meta data center in Kansas City, MO; and the $500 million Eli Lilly manufacturing campus in Concord, NC.

Nonbuilding construction starts fell -21% in November to a seasonally adjusted annual rate of $218.1 billion. The only category to post a gain for the month was utility/gas which rose a mere +3%. Highway and bridge starts fell -32%, miscellaneous nonbuilding was -30% lower, and environmental public works fell -7%. Through the first 11 months of the year, total nonbuilding starts were +16% higher than in 2021. Highway and bridge starts were +25% higher, environmental public works were +17% higher, and utility/gas plants were up +11%. Miscellaneous nonbuilding starts were -2% lower on a year-to-date basis.

The largest nonbuilding projects to break ground in November were the $678-million 577MW Fox Squirrel solar farm in Madison County, WI; a $522-million coastal resilience project near the Brooklyn Bridge in Brooklyn, NY; and the $465-million 300MW White Rock wind project in Anadarko, OK.

Residential building starts fell -5% in November to a seasonally adjusted annual rate of $346.5 billion. Single family starts lost -9%, while multi-family starts gained +1%. Through the first 11 months of 2022, residential starts were -1% lower when compared to the same time frame in 2021. Multi-family starts were up +26%, while single family housing slipped -12%.

The largest multi-family structures to break ground in November were the $345-million 601 N. Central Ave. mixed-use building in Phoenix, the $350-million YMCA of Middle Tennessee residential tower in Nashville, TN; and the $250-million Halletts Point (Building 3) in Astoria, NY.