At a seasonally adjusted annual rate of $849.6 billion, new construction starts in July advanced 2 percent from the previous month, according to Dodge Data & Analytics. This marked the third consecutive monthly increase for total construction starts, following gains of 10 percent in May and 9 percent in June. By major sector, nonbuilding construction led the way in July with a 24 percent hike, boosted by several large public works and electric utility/gas plant projects. Nonresidential building in July settled back 4 percent. Residential building in July slipped 6 percent, as multifamily housing retreated from its elevated June amount. Through the first seven months of 2019, total construction starts on an unadjusted basis were $459.3 billion, down 6 percent from the same period a year ago.
The July statistics raised the Dodge Index to 180 (2000=100), compared to 176 in June, and marked the highest level for the Dodge Index so far during 2019. The latest two months have seen the Dodge Index move above its 2018 monthly average at 172.
Nonresidential building in July slipped 4 percent to $293.4 billion (annual rate). The institutional building categories as a group fell 17 percent after surging 37 percent in June, which featured elevated activity for transportation terminals, public buildings and healthcare facilities. The transportation terminal category plunged 64 percent, and the public buildings category fell 59 percent in July. The healthcare facilities category in July retreated 10 percent from its elevated June pace, although the latest month still included the start of five projects valued each at $100 million or more.
Educational facilities slipped 3 percent in July after showing improvement during the previous three months. Even with the slight decline, the latest month did see the start of four high school construction projects valued each in excess of $125 million. On the plus side in July, amusement-related construction climbed 44 percent, and the religious buildings category jumped 95 percent.
The commercial building categories as a group grew 4 percent in July, continuing to strengthen for the second month in a row after subdued activity back in May. Store construction, despite its weakening trend during 2019, advanced 24 percent, and office construction edged up 1 percent. Warehouse construction fell 13 percent, following a 20 percent gain in June. The manufacturing building category in July bounced back
58 percent after a lackluster June.
Residential building in July was $300.1 billion (annual rate), down 6 percent from June. After climbing 28 percent in June, multifamily housing retreated 16 percent in July as the current year’s moderate pullback resumed. The July pace for multifamily housing was down 15 percent from its average monthly rate during 2018. The July pace for single-family housing was down 6 percent from its average monthly rate during 2018, as affordability constraints resulting from high home prices continue to outweigh the benefits of low mortgage rates.
The 6 percent decline for total construction starts on an unadjusted basis during the January–July period of 2019 was due to reduced activity for two of the three main construction sectors. Nonresidential building fell 9 percent year-to-date, with this pattern by segment: commercial building down 1 percent, institutional building down 7 percent, and manufacturing building down 46 percent. The steep drop for manufacturing building reflected the comparison to a very strong volume during the first seven months of 2018. If the manufacturing building category is excluded, nonresidential building year-to-date would be down 4 percent. Residential building year-to-date also fell 9 percent, with single-family housing down 7 percent and multifamily housing down 14 percent.
