ConDig (21-Jul–21). US construction starts tumbled 7% in June to a seasonally adjusted annual rate of $8863.6 billion amid a slowdown across all three major sects, according to latest figures from Dodge Data & Analytics.
The drop comes amid elevated building material costs, supply shortages and a deepening lack of skilled labor, particularly in the single family housing sector.
Large projects that broke ground in May were absent in June for nonresidential building and nonbuilding starts, resulting in declines, New Jersey-based Dodge Data & Analytics reported.
Nonbuilding construction starts crumbled 13% in June to a seasonally adjusted annual rate of $171.8 billion.
While highway and bridge starts slid 7%, the overall decline in nonbuilding starts was the result of a 63% drop in the utility and gas plant category that followed a large increase in May.
Total nonbuilding starts were up 4% for the first half of this year. Environmental public works surged 35%, while utility/gas plants gained 13%. Miscellaneous nonbuilding (-6%) and highway and bridge starts (-9%), however, dragged on the sector.
Nonresidential building starts dipped 7% last month to a seasonally adjusted annual rate of $288 billion.
It comes as large healthcare and manufacturing projects provided a significant uptick to May numbers, but the absence of similar projects in June led to normalized starts activity.
Commercial starts increased 12% with all categories posting gains, while institutional starts fell by 9% and manufacturing starts lost 62% over the month.
For the year-to-date, nonresidential building starts were slightly ahead of the first six months of last year.
Residential building starts dropped 5% in June to a seasonally adjusted annual rate of $403.8 billion. Single family starts lost 8%, while multifamily starts were 2% higher. From January through June, total residential starts were 32% higher than the same period a year earlier. Single family starts were up 37%, while multifamily starts were 19% higher.
“Unabated materials price inflation has driven a significant deceleration in single family construction,” said Richard Branch, chief economist for Dodge Data & Analytics.
“Lumber futures have eased in recent weeks, but builders are unlikely to see much relief over the short-term, meaning building costs will continue to negatively influence the housing industry. On the other hand, the nascent recovery in nonresidential buildings has continued on as projects pile up in the planning stages. These mixed signals coming from both residential and nonresidential construction starts suggest that recovery from the pandemic will remain uneven in coming months as rising materials prices and labor shortages weigh on the industry.”