ConDig (21-Mar-24). US construction starts tumbled 8% in February to a seasonally adjusted annual rate of $1.07 trillion, according to Dodge Construction Network.
The drop comes amid a 16% fall in nonresidential building starts, while nonbuilding starts lost 3%, and residential starts fell by 2%.
For the 12 months ending February, total construction starts were 2% higher on the same period las year. Nonresidential building starts were down 2%; residential starts were 4% lower, and nonbuilding starts up 19%.
“Construction activity was hit hard by higher rates and more restrictive credit standards”, said Richard Branch, chief economist for Dodge Construction Network.
“Starts struggled over the past several months as the lagged effect of higher rates impacted projects moving forward through the planning process. Additionally, the significant deficit of skilled labor led to further delays – especially in the manufacturing sector. While optimism should prevail in the second half of the year as the Federal Reserve begins to cut rates, some sectors like commercial, will make little headway over the remainder of the year.”
Nonbuilding construction starts dipped 3% in February to a seasonally adjusted annual rate of $275 billion. Highway and bridge starts lost 17% during the month, while environmental public works crumbled 8%. However, utility/gas starts rose 13% and miscellaneous nonbuilding starts were 48% higher.
Nonresidential building starts fell 16% in February to a seasonally adjusted annual rate of $407 billion. Commercial starts dipped 3% due to a sizeable pullback in warehouse starts, while manufacturing starts were off 28%
Residential building starts edged down 2% last month, falling to a seasonally adjusted annual rate of $392 billion. Single family starts improved 5% while multifamily starts lost 12%.
For the 12 months ending January 2024, residential starts were 4% lower than the previous 12 months. Single family starts were 2% lower, while multifamily starts were 6% lower on a 12 month rolling sum basis.