Total construction starts declined 24.8% in August to a seasonally adjusted annual rate of $1.34 trillion, according to Dodge Construction Network. Nonresidential building starts fell 32.0%, nonbuilding starts dropped 26.7%, and residential starts decreased 5.2%.
“After a pop in activity last month, construction starts largely normalized throughout August,” stated Sarah Martin, Director of Economic Research at Dodge Construction Network. “Abstracting from the month-to-month volatility, the story remains consistent. Data center, semiconductor and energy construction are driving growth, while several other sectors are facing subdued activity alongside deeper labor shortages, and accelerating material prices.”
Despite the monthly decline, total starts were up 15.2% year to date through August. Nonresidential starts increased 23.4% and nonbuilding starts rose 22.2%, while residential starts declined 1.8%.
Nonresidential building starts fell to an annual rate of $624 billion in August. Commercial starts were down 37.6% over the month, including a 31.3% decline in office and data center projects. Warehouse starts fell 13.4%, while hotel construction more than tripled following a weak July and retail starts increased 26.9%.
Institutional starts declined 18.1%, with education down 14.3%. Healthcare provided a bright spot, jumping 96.1% over a month. Manufacturing starts plunged 80.8%, largely reflecting the absence of the major megaprojects that boosted July totals.
Looking at the longer-term trend, nonresidential starts for the 12 months ending August were 17.9% higher than the previous 12-month period. Commercial starts climbed 48.6%, manufacturing increased 2.8%, and institutional starts declined 4.3%.
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