ConDig (29-Jan-19). US construction starts tumbled 10% in December from the month prior to a seasonally adjusted annual rate of $708.9 billion, building on November’s 7% drop, according to Dodge Data & Analytics.
The fall comes as nonresidential building decreased 14% as the commercial building segment lost momentum, while starts in the residential building sector dropped 8% due to reduced activity in December for both single family and multifamily housing.
Ground broken in the nonbuilding construction segment fell 9% in December amid a sharp plunge in the electric utility/gas plant category that outweighed a rebound in public works.
For the year 2018, total construction starts edged up 0.3% to $789 billion from $786.2 billion in 2017.
It comes as an increase for total construction starts was dampened by a 31% drop for the electric utility/gas plant sector.
“Last year’s brisk economic expansion enabled market fundamentals for multifamily housing and commercial building to strengthen, which supported more growth for apartment projects, office buildings, and hotels. However, store construction continued to decline, adversely affected by the glut of retail space produced in the previous decade as well as by the greater role now played by e-commerce,” said Robert A. Murray, chief economist for Dodge Data & Analytics.
“Single family housing showed improvement early in 2018, but then plateaued and began to recede given affordability constraints. The institutional building segment showed more growth for educational facilities and witnessed a number of major transportation terminals reach groundbreaking, although not to the same extent as what took place in 2017.”
He added that public works construction benefitted from the 2018 omnibus federal appropriations bill passed last March, as well as funding arising from recent state transportation bond measures.
“Going forward into 2019, economic growth is not expected to be as strong as what occurred during 2018, which may dampen groundbreaking for multifamily housing and commercial building projects. In addition, more growth for public works this year requires that federal appropriations for fiscal 2019 get finalized without much further delay,” Murray noted.