March Construction Starts Advance 11 Percent

June 2018

New construction starts in March increased 11 percent from the previous month to a seasonally adjusted annual rate of $785.2 billion, according to Dodge Data & Analytics. The substantial gain followed modest declines in January (down 2 percent) and February (down 3 percent), and brings the pace of total construction starts to the highest level over the past six months. The nonbuilding construction sector soared 73 percent in March.
    
At the same time, both nonresidential building and residential building eased back slightly in March, with respective declines of 1 percent and 2 percent. During the first three months of 2018, total construction starts on an unadjusted basis were $167.3 billion, down 7 percent from last year. On a 12-month moving total basis, total construction starts for the 12 months ending March 2018 were up 1 percent from the 12 months ending March 2017.
    
The March data produced a reading of 166 for the Dodge Index (2000=100), up from 150 for February. During the first quarter of 2018 the Dodge Index averaged 157, up 2 percent from the 154 average for last year’s fourth quarter, while slightly below the 161 average for the full year 2017.
    
Nonresidential building in March was $243.3 billion (annual rate), down 1 percent from the previous month. The commercial categories as a group retreated 13 percent, with declines reported for four of the five structure types. Hotel construction fell 40 percent, office construction dropped 16 percent, store construction retreated 20 percent, and commercial garage construction slipped 7 percent. Warehouse construction was the one commercial structure type to report a March gain, rising 37 percent.
    
The institutional categories as a group fell 11 percent in March, but the educational facilities category increased 8 percent and transportation terminal construction grew 40 percent. Offsetting the overall declines for commercial and institutional building in March was a 280 percent jump by the manufacturing building category.
    
Residential building in March was $336.2 billion (annual rate), down 2 percent from the previous month. Multifamily housing slipped 7 percent. The top five metropolitan areas ranked by the dollar amount of multifamily starts were New York City, Seattle, Boston, Los Angeles and Miami. Single-family housing in March was unchanged from February.
    
The 7 percent decline for total construction starts on an unadjusted basis during this year’s January–March period compared to the last year reflected decreased activity for two of the three main sectors. Nonresidential building fell 17 percent year-to-date, nonbuilding construction fell 15 percent, and residential building grew 7 percent year-to-date.
    
By geography, total construction starts for the first three months of 2018 versus last year showed this performance: the South Atlantic, down 1 percent; the South Central, down 5 percent; the West, down 9 percent; the Midwest, down 10 percent; and the Northeast, down 14 percent.
    
Useful perspective comes from looking at 12-month moving totals, in this case the 12 months ending March 2018 versus the 12 months ending March 2017. On this basis, total construction starts were up 1 percent. By major sector, residential building advanced 3 percent, with single-family housing up 7 percent while multifamily housing retreated 6 percent. Nonresidential building slipped 1 percent, with institutional building down 1 percent and commercial building down 6 percent, while manufacturing building climbed 32 percent. Nonbuilding construction was also down 1 percent.