Total construction starts rose 12 percent in October to a seasonally adjusted annual rate of $787.9 billon. While sizeable, the increase does not erase September’s substantial pullback in starts. All three major categories moved higher over the month, nonbuilding starts rose 25 percent, nonresidential buildings increased 19 percent, while residential activity gained 2 percent. Four of the five regions saw construction starts move higher in October, with the only decline coming in the South Central region.
Through the first 10 months of 2020, total construction starts were 11 percent lower than the same period of 2019. Nonresidential starts were 24 percent lower and nonbuilding were down 14 percent. Residential starts, however, were 2 percent higher in the first 10 months of this year. For the 12 months ending October 2020, total construction starts were down 6 percent compared to the previous 12 months. Nonresidential building starts were 17 percent lower and nonbuilding starts were 7 percent lower, while residential building starts rose 4 percent over the 12 months ending October 2020. In October, the Dodge Index rose 12 percent to 167 (2000=100) from the reading of 149 in September. The Dodge Index was flat on a year-over-year basis, and 8 percent lower than its pre-pandemic level in February.
“October’s gain was welcome news following the large step back in starts during the previous month,” states Richard Branch, chief economist for Dodge Data & Analytics. “The month’s increase, however, does not mean all is well with the economy and construction sector. The economy lost traction as the stimulus provided by the CARES Act ended. With the next wave of COVID-19 infections looming, the economy will continue to lose steam until more fiscal stimulus is provided and a vaccine has been widely adopted. Until that has occurred, the construction sector will continue to be volatile.”
Nonbuilding construction posted a solid 25 percent gain in October, increasing to a seasonally adjusted annual rate of $222.4 billion. The gain was driven in large part by a sizeable tunnel project that drove highway and bridge starts 51 percent higher. The utility/gas plant category rose 41 percent, while miscellaneous nonbuilding gained 6 percent. Environmental public works fell 24 percent over the month.
The largest nonbuilding project to break ground in October was the $3.6 billion Hampton Roads Bridge and Tunnel project in Norfolk, Va. Also starting in October was the $1 billion Gemini Solar Project in Clark County, Nev., and the $450 million Indiana Crossroads Wind Farm in White County, Ind.
Through the first 10 months of the year, total nonbuilding starts were down 14 percent from the same time period of 2019. Starts in the highway and bridge category were up 8 percent, while environmental public works were 8 percent lower. The miscellaneous nonbuilding and utility/gas plant categories were each down 34 percent year-to-date. For the 12 months ending October 2020, total nonbuilding starts were down 7 percent from the 12 months ending October 2019. Street and bridge starts were 8 percent higher, while utility/gas plant starts were down 14 percent. Environmental public works starts were down 5 percent and miscellaneous nonbuilding starts were 29 percent lower in the 12 months ending October 2020.
Nonresidential building starts recovered slightly from the sharp September decline, gaining 19 percent in October to a seasonally adjusted annual rate of $209.0 billion. Several large office and warehouse projects got underway during the month pushing commercial starts up 23 percent. Manufacturing starts gained 26 percent during the month, while a large courthouse project helped institutional starts gain 15 percent.
The largest nonresidential building project to get started in October was the $585 million third phase of the Project Echo Facebook Data Center in Sandston, Va. Also getting started during the month was the $400 million Tesla Gigafactory in Austin, Texas, and the $330 million Campus at Horton office project in San Diego.
Total nonresidential building starts were down 24 percent through the first 10 months of 2020. Commercial starts were 27 percent lower and institutional starts were 16 percent lower, while manufacturing starts tumbled 54 percent. For the 12 months ending October 2020, total nonresidential building starts were down 17 percent. Institutional building starts fell 13 percent, commercial starts dropped 20 percent, and manufacturing starts declined 22 percent over the 12 months ending October 2020.
Residential building starts moved 2 percent higher in October to a seasonally adjusted annual rate of $356.5 billion. The increase in the multifamily sector was robust, with starts rising 62 percent following a 52 percent loss the previous month. Single family starts fell 9 percent in October.
The largest multifamily building to break ground in October was the $386 million Waterview at Greenpoint project in Brooklyn, N.Y. Also starting were a $250 million mixed-use project on 47th Street in New York, N.Y., and a $200 million residential tower on High Street in Houston.
Through the first 10 months of 2020, residential construction starts were 2 percent higher than in the same time period of 2019. Single family starts were up 8 percent, but multifamily starts were down 11 percent. For the 12 months ending in October, total residential starts were 4 percent higher than in the 12 months ending October 2019. Single family starts were up 8 percent, while multifamily starts were down 5 percent.