February Experiences Slide in Construction Starts

Total construction starts fell 2 percent in February to a seasonally adjusted annual rate of $797.3 billion. Nonbuilding construction starts posted a solid gain after rebounding from a weak January, however, residential and nonresidential building starts declined, leading to a pullback in overall activity. The Dodge Index fell 2 percent in February, to 169 (2000=100) from January’s 171.

“With spring just around the corner, hope is building for a strong economic recovery fueled by the growing number of vaccinated Americans,” says Richard Branch, chief economist for Dodge Data & Analytics. “But the construction sector will be hard-pressed to take advantage of this resurgence as rapidly escalating materials prices and a supply overhang across many building sectors weighs on starts through the first half of the year.”

Below is the full breakdown across nonbuilding, nonresidential, and residential construction:

Nonbuilding construction starts gained a robust 20 percent in February to a seasonally adjusted annual rate of $200.3 billion. The miscellaneous nonbuilding sector (largely pipelines and sitework) surged 76 percent while environmental public works increased 26 percent and highway and bridge starts moved 11 percent higher. By contrast, utility/gas plant starts lost 17 percent in February.

For the 12 months ending February 2021, total nonbuilding starts were 13 percent lower than the 12 months ending February 2020. Highway and bridge starts were 4 percent higher on a 12-month rolling sum basis while environmental public works were up 1 percent. Miscellaneous nonbuilding fell 26 percent and utility/gas plant starts were down 37 percent for the 12 months ending February 2021.

The largest nonbuilding projects to break ground in February were the $2.1 billion Line 3 Replacement Program (a 337-mile pipeline in Minnesota), the $1.2 billion Red River Water Supply Project in North Dakota, and the $950 million New England Clean Energy Connect Power Line in Maine.

Nonresidential building starts fell 7 percent in February to a seasonally adjusted annual rate of $208.1 billion. Institutional starts dropped 8 percent during the month despite a strong pickup in health care. Warehouse starts fell back during the month following a robust January, offsetting gains in office and hotel starts and dragging down the overall commercial sector by 8 percent.

For the 12 months ending February 2021, nonresidential building starts dropped 28 percent compared to the 12 months ending February 2020. Commercial starts declined 30 percent, institutional starts were down 19 percent, and manufacturing starts slid 58 percent in the 12 months ending February 2021.

The largest nonresidential building projects to break ground in February were Ohio State University’s $1.2 billion Wexner Inpatient Hospital Tower in Columbus, Ohio; ApiJect Systems’ $785 million Gigafactory in Durham N.C.; and Sterling EdgeCore’s $450 million data center in Sterling, Va.

Residential building starts slipped 7 percent in February to a seasonally adjusted annual rate of $388.9 billion. Both single family and multifamily starts fell during the month, with each losing 7 percent.

For the 12 months ending February 2021, total residential starts were 4 percent higher than the 12 months ending February 2020. Single-family starts gained 12 percent while multifamily starts were down 15 percent on a 12-month sum basis.

The largest multifamily structures to break ground in February were Bronx Point’s $349 million mixed-use development in the Bronx, N.Y., the $215 million Broadway Block mixed-use building in Long Beach, Calif., and the $200 million GoBroome mixed-use building in New York City.

Regionally, February’s starts fell lower in the South Central and West regions but moved higher in the Midwest, Northeast and South Atlantic Regions.

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