ConDig (18-May-21).  US construction starts dipped 2% in April to a seasonally adjusted annual rate of $853.5 billion amid a decline in the single family sector that offset an uptick in nonresidential building and nonbuilding starts, according to latest figures from Dodge Data & Analytics. 

The drop comes amid surging building material costs, supply shortages and a deepening lack of skilled labor.

Residential building starts crumbled 12% in April to a seasonally adjusted annual rate of $387.8 billion. But on a year-to-date basis, total residential starts were 24% higher. Single family starts were up 31%, while multifamily starts were 6% higher.

But nonbuilding construction starts increased 2% in April to a seasonally adjusted annual rate of $189.5 billion. The utility and gas plant category rose 5%, while environmental public works and highways and bridges gained 2% and 1% respectively. The miscellaneous nonbuilding category dropped 3% in April. 

For the year-to-date, total nonbuilding starts were 6% higher than during the first four months of 2020. Starts in the environmental public works category were 37% higher, while miscellaneous nonbuilding starts were up 25%, and utility and gas plant starts were 3% higher. Highway and bridge starts were down 11%.

Nonresidential building starts shot up 16% in April to a seasonally adjusted annual rate of $276.3 billion. Institutional building starts rose 19%, driven by education, transportation, and recreation buildings, while commercial starts rose 12% due to gains in the office and warehouse categories. Manufacturing starts also increased in April, climbing 25%. 

Nonresidential building starts for the year-to-date were 17% lower than during the first four months of 2020. Commercial starts were down 20%, while institutional starts were down 18%. Through the first four months of 2021, manufacturing starts were up 13%.

“The pullback in single family construction starts was inevitable after showing exceptional strength over the past year,” said Richard Branch, chief economist for Dodge Data & Analytics. “Higher material prices, supply shortages, and a dearth of skilled construction labor were bound to catch up with housing and will ultimately limit the ability of this sector to show the same rate of expansion this year as it did last. Meanwhile, nonresidential starts are stabilizing and should continue to heal throughout 2021, however, this sector will also be challenged by similar issues facing the housing market that will cause its starts to be below pre-pandemic levels for months to come.”