Gains in Several Sectors Boost Construction Industry Across U.S.

Building on Momentum

 

 

Total construction starts rose 10% in May to a seasonally adjusted annual rate of $1.24 trillion, according to Dodge Construction Network. Non-building starts gained 49% during the month, driven by the start of an offshore wind project and a liquefied natural gas (LNG) facility, while residential starts lost 7%, and non-residential building starts were down 2%.

On a year-to-date basis through May, total construction starts were up 11% from the first five months of 2023. Residential starts were up 16%, while non-building starts gained 17%, and non-residential building starts rose 3%.

For the 12 months ending May 2024, total construction starts were up 2% from the 12 months ending May 2023. Non-residential building starts were down 7%, residential starts were up 5%, and non-building starts were up 14% on a 12-month rolling sum basis.

“Single-family starts in particular have risen in eight of the last 12 months despite high mortgage rates. Growth in single-family will incentivize further demand for retail, health, and education starts, among others.”

“Even though May’s gain in construction starts was mainly due to a handful of large projects, the data highlights that there is some grassroots demand building in the market,” said Richard Branch, chief economist of Dodge Construction Network. “Single-family starts in particular have risen in eight of the last 12 months despite high mortgage rates. Growth in single-family will incentivize further demand for retail, health, and education starts, among others, and the stability in the Dodge Momentum Index, which tracks projects in planning, underscores this optimism.”

 

Non-building

Nonbuilding construction starts rose 49% in May to a seasonally adjusted annual rate of $463 billion. The increase was solely on the back of a massive gain in gas and utility starts as two large projects (a $10 billion offshore wind project in Virginia and an $11 billion LNG project in Texas) got underway. Environmental public works starts fell 10%, miscellaneous non-building starts lost 16%, while highway and bridge starts were 22% lower in May.

On a year-to-date basis through May, total non-building starts were 17% higher. Gas and utility starts were up 35%, environmental public works and miscellaneous non-building were each up 24%, and highway and bridge starts were up 3% on a year-to-date basis through May.

For the 12 months ending May 2024, total non-building starts were 14% higher than the 12 months ending May 2023. Utility and gas starts were up 28%, miscellaneous non-building starts rose 19%, environmental public works starts moved 14% higher, and highway and bridge starts rose 4% for the 12 months ending May 2024.

 

Non-residential

Non-residential building starts fell 2% in May to a seasonally adjusted annual rate of $415 billion. Manufacturing starts lost 14% following a very strong April, while institutional starts dropped 6%. Commercial starts gained 10% due to gains in warehouse, office, and parking starts. On a year-to-date basis through May, total non-residential starts were up 3%. Institutional starts were 20% higher, while commercial starts were down 5%, and manufacturing starts were 19% lower on a year-to-date basis through May.

For the 12 months ending May 2024, non-residential building starts were 7% lower than the previous 12 months. Manufacturing starts were down 32%, and commercial starts were down 11%, while institutional starts were 10% higher for the 12 months ending May 2024.

 

Residential

Residential building starts moved 7% lower in May to a seasonally adjusted annual rate of $365 billion. Single-family starts rose 2%, while multi-family starts lost 25%. On a year-to-date basis through five months, total residential starts were 16% higher. Single-family starts improved 29%, and multi-family starts were 5% lower on a year-to-date basis.

For the 12 months ending May 2024, residential starts were 5% higher than the previous 12 months. Single-family starts were 15% higher, while multi-family starts were 10% lower on a 12-month rolling-sum basis.

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