Construction Starts Hit 10-Month Low, Declining -15% in November

Total construction starts fell -15% in November, dropping to a seasonally adjusted annual rate of $927 billion, according to Dodge Construction Network. Nonresidential building starts fell -29% during the month, residential starts lost -6%, and nonbuilding starts dropped -2%.

Year-to-date through November 2023, total construction starts lagged by -4% compared to the previous year. Residential and nonresidential starts were down -14% and -7%, respectively, but nonbuilding starts were up +19%.

“Construction starts are deeply feeling the impact of higher rates,” said Richard Branch, chief economist for Dodge Construction Network, in the press release. “While the Federal Reserve seems poised to start cutting rates in the New Year, the impact on starts will lag. As a result, starts are expected to be weak through the mid-point of 2024 before growth resumes.”

Nonresidential

Nonresidential building starts decreased -29% in November to a seasonally adjusted annual rate of $345 billion. Manufacturing starts plummeted -74% following a strong several strong project starts in October. Commercial starts fell -19% with office buildings being the only category to see a gain. Institutional starts rose +7% due to a significant uptick in healthcare activity. Year-to-date through November, total nonresidential starts were -7% lower than in 2022. Institutional starts gained +5%, while commercial and manufacturing starts fell -13% and -18%, respectively.

The largest nonresidential building projects to break ground in November were the $1.9-billion Children’s Hospital of Philadelphia Inpatient Tower in Pennsylvania, the $1.6-billion LG Energy Battery Plant in Queen Creek, AZ; and the $750-million expansion of the Iowa Army Ammunition Plant in Middletown, IA.

Residential

Residential building starts declined -6% in November to a seasonally adjusted annual rate of $359 billion. Single family starts increased +1%, while multifamily starts fell -19%. Year-to-date through November 2023, total residential starts were down by -14%, with single-family starts dropping -15% and multi-family starts by -12%.

The largest multi-family structures to break ground in November were the $200-million 55 Broad Street residential conversion in New York;, the $200-million redevelopment of The Superman Building in Providence, RI; and the $185-million Union West mixed-use development in Raleigh, NC.

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

Nonbuilding

Nonbuilding construction starts in November fell -2%, amounting to a seasonally adjusted $223 billion. Highway and bridge starts decreased -8%, environmental public works starts fell -4%, utility/gas starts rose +17%, and miscellaneous nonbuilding starts improved by +1%.

Year-to-date through November, nonbuilding starts were up +19% overall. Utility/gas plants rose +49%, and miscellaneous nonbuilding starts increased +18%. Highway and bridge starts gained +9%, and environmental public works rose +11%.

The largest nonbuilding projects to break ground in November were the $834-million I-405 Brickyard to SR 527 improvements in Bothell, WA; the $406-million second phase of the Sherco Solar Farm in Becker, NM; and a $353-million addition to the Silverhawk Generating Station in Moapa, NV.