While pockets of the construction market like data centers and EV plants were booming, Dodge Construction Network said the overall market was sluggish.
Dodge said total construction starts lost -19% in June, falling to a seasonally adjusted annual rate of $1 trillion. Much of the decline was due to a stark decline in utility/gas starts following a strong May that saw several megaprojects get underway. During the month, nonbuilding starts fell -46% (following a +49% gain in May), while nonresidential starts fell -13%. Residential starts rose +9% during the month.
On a year-to-date basis through June, total construction starts were up +7% from the first six months of 2023. Residential starts were up +14%, while nonbuilding starts gained +8%, and nonresidential building starts rose +1%.
For the 12 months ending June 2024, total construction starts were up +1% from the 12 months ending June 2023. Nonresidential building starts were down -7%; residential starts were up +7%; and nonbuilding starts were up +8% on a 12-month rolling sum basis.
“The construction market remains sluggish as high interest rates continue to reverberate through the sector,” said Richard Branch, chief economist of Dodge Construction Network, in the press release. “However, the Dodge Momentum Index, which tracks nonresidential building projects entering the planning phase, has been reasonably steady over the last year, indicating that owners and developers remain cautiously optimistic that the conditions will be more conducive to construction in the future.
“But moribund starts activity means that these projects are piling up like water behind a dam. Lower rates in 2024 will allow these projects to start flowing again, resulting in a quicker pace of activity towards year-end.”
Nonresidential
Nonresidential building starts lost -13% in June to a seasonally adjusted annual rate of $359 billion. Manufacturing starts tumbled -34%, while institutional starts retreated -19%. On the plus side, commercial starts rose +4% in June due to an increase in office and data center activity along with increased retail starts. On a year-to-date basis through June, total nonresidential starts were up +1%. Institutional starts were +11% higher, while commercial starts were down -3%, and manufacturing starts were -19% lower on a year-to-date basis through June.
Through June 2024 YOY, nonresidential building starts were -7% lower than the previous 12 months. Manufacturing starts were down -33% and commercial starts were down -9%, while institutional starts were +8% higher for the 12 months ending June 2024.
The largest nonresidential building projects to break ground in June were the $1.5-billion QTS Albany 1 & 2 data centers in New Albany, OH; the $550-million First Solar manufacturing plant in New Iberia, LA; and the $520-million TGH Taneja Tower Surgical building in Tampa, FL.
Nonbuilding
Nonbuilding construction starts fell -46% from May to June to a seasonally adjusted annual rate of $251 billion. This drop follows a large increase in May when both an LNG plant and an offshore wind project got underway. As a result of that payback, gas/utility plants fell -90% over the month, while environmental public works lost -4%. Highway and bridge starts gained +5% in June and miscellaneous nonbuilding starts rose +28%. On a year-to-date basis through June total nonbuilding starts were +8% higher. Environmental public works starts were up +20%; gas/utility starts were up +16%; highway and bridge starts rose +1%; and miscellaneous nonbuilding starts were down -2% through June.
For the 12 months ending June 2024, total nonbuilding starts were +8% higher than the 12 months ending June 2023. Utility/gas starts were up +23%; environmental public works starts improved +12%; while highway and bridge starts were even, and miscellaneous nonbuilding starts lost -6% for the 12 months ending June 2024.
The largest nonbuilding projects to break ground in June were the $510-million Airo Ivy City Yard rail improvements in Washington, D.C.; the $400-million Cadillac El Dorado Solar facility in Callahan County, TX; and the $400-million replacement of the Belmont Park racing facility in Elmont, NY.