Total construction starts increased 6 percent in June to a seasonally adjusted annual rate of $641.4 billion. This marks the second consecutive monthly gain in construction starts following the COVID-19 induced declines in March and April. In June nonresidential building starts gained 6 percent and starts in the nonbuilding sector moved 27 percent higher. Residential starts, by contrast, fell 6 percent during the month.
Through the first six months of the year, starts were down 14 percent from the same period in 2019. Nonresidential starts fell 22 percent, nonbuilding starts were down 14 percent, and residential starts dropped 5 percent. For the 12 months ending in June 2020, total construction starts were down 2 percent from the previous 12 months. Nonresidential building starts were down 7 percent and residential building starts were flat, but nonbuilding starts were 3 percent higher in the past 12 months. In June, the Dodge Index moved 6 percent higher to 136 (2000=100) from the 128 reading in May. Compared to a year earlier, the Dodge Index was down 28 percent.
“Construction starts activity remains significantly weaker than year-ago levels, even though it has been slowly increasing since its nadir in April,” states Richard Branch, chief economist for Dodge Data & Analytics. “May’s gain in starts was fueled by a handful of very large projects, but June’s gain appears to be much more organic in nature. Construction starts should continue to post modest gains in the months to come as the economy continues to recover from the shortest and steepest recession in U.S. history. However, the recent acceleration in new COVID-19 cases in states such as Texas, Florida, and California is a significant downside risk to the economy and the construction industry’s growth trajectory.”
Nonbuilding construction rose 27 percent in June to a seasonally adjusted annual rate of $191.1 billion. Utility/gas plants moved 108 percent higher in the month due to the start of over $2 billion in renewable power projects (split between solar and wind facilities). The miscellaneous nonbuilding category rose 63 percent in June, while environmental public works moved 38 percent higher. Construction starts for highways and bridges dropped 4 percent during the month.
The largest nonbuilding project to break ground in June was the $1.4 billion Federal Way Link Extension in Seattle. Also starting during the month were the $600 million Golden Hills Wind Project in Sherman County, Ore., and the $438 million Athos I solar facility in Desert Center, Calif.
Through June, total nonbuilding starts were down 14 percent compared to the same time period in 2019. Highway and bridge construction starts were up 8 percent, while environmental public works and the miscellaneous nonbuilding sector were each 20 percent lower through the first six months of the year. Utilities/gas plants were down 40 percent on a year-to-date basis. On a 12-month rolling basis, total nonbuilding starts were up 3 percent from the 12 months ending June 2020. Starts in the utility/gas plant category were 14 percent higher, while miscellaneous nonbuilding starts increased 6 percent. Street and bridge starts were 1 percent lower for the 12 months ending June, while environmental public works were down 4 percent.
Nonresidential building starts moved 6 percent higher in June to a seasonally adjusted annual rate of $198.5 billion. Institutional building starts rose 15 percent during the month, while commercial building starts moved 4 percent higher. Manufacturing starts, however, fell 32 percent following the start of a $950 million steel plant in May.
The largest nonresidential building project to break ground in June was the $384 million Women’s and Children’s hospital tower in San Antonio. Also starting in June was the $306 million Aligned Energy Data Center in Ashburn, Va., and the $294 million renovation of SeaTac International Airport in Seattle.
On a year-to-date basis, total nonresidential building starts were 22 percent lower than the first six months of 2019. Institutional building starts were down 15 percent, while commercial starts were 27 percent lower. Manufacturing starts dropped 38 percent on a year-to-date basis. On a 12-month total basis, total nonresidential building starts were 7 percent lower than the 12 months ending June 2019. Commercial starts have dropped 8 percent, while institutional starts were down 9 percent. Manufacturing starts are 9 percent higher on a rolling 12-month basis.
Residential building starts fell 6 percent in June to a seasonally adjusted annual rate of $251.8 billion. Both multifamily and single family starts were lower during the month, with single family falling 7 percent and multifamily dropping 4 percent.
The largest multifamily structure to break ground in June was a $170 million mixed-use project in Jersey City, N.J. Also starting during the month were the $113 million Flower Mart Apartments in Mountain View, Calif., and the $100 million 509 4th Avenue project in New York.
Through the first six months of 2020, residential construction starts were down 5 percent versus the same time period in 2019. Single family starts were 1 percent lower, while multifamily starts were down 16 percent year-to-date. For the 12 months ending in June, total residential starts were flat when compared to the prior 12 months. Single family starts were up 3 percent, while multifamily starts were off 6 percent.