ConDig (21-Mar-23). US construction starts jumped up 6% in February to a seasonally adjusted annual rate of $912.8 billion, according to Dodge Construction Network.

It comes as residential and nonresidential building starts increased 11% and 9% respectively, and offset nonbuilding starts that dipped 5%.

For the first two months of the year, total construction starts were 17% below that of 2022. On a year-over-year basis, residential starts were 31% lower, nonresidential starts were tumbled 14%, while nonbuilding starts rose 6%. 

“February construction starts were a mixed bag that led to marginal growth,” said Richard Branch, chief economist for Dodge Construction Network. “Single family units posted a gain for the first time in 13 months, and manufacturing starts continued to be very robust, showing signs of promise early into 2023. However, the downturn in commercial and institutional building starts could very well be the beginning of an anticipated slow-down as the construction sector pulls back in the face of higher interest rates and lagging economic growth. While this ebbing should be comparatively mild, some construction verticals could face extreme stress as the year progresses.”

Nonbuilding construction starts declined 5% in February to a seasonally adjusted annual rate of $225 billion. This primarily results from a 30% decline in environmental public works starts and a 5% loss in highway and bridge starts. On the plus side, utility/gas plant starts rose 68% and miscellaneous public works starts were up 6%.

Nonresidential building starts increased 9% in February to a seasonally adjusted annual rate of $368 billion. It follows a 218% gain in manufacturing starts due to the start of a large EV battery plant in Ohio. Commercial starts dipped 2% in February as office and parking structure starts fell, offsetting increases in retail, hotels and warehouse activity. Institutional starts also fell during the month, following a decline in education and healthcare projects.

Residential building startsjumped up 11% in February to a seasonally adjusted annual rate of $320 billion. Single family and multifamily starts edged up 4% and 22% respectively. For the 12 months ending in February 2023, residential starts were 9% lower than the 12 months ending in February 2022. Single family starts were 20% lower, while multifamily starts were up 18% on a rolling 12 month basis.