Total construction starts dropped 1 percent in May to a seasonally adjusted annual rate of $902.8 billion, according to Dodge Data & Analytics. The brunt of the decline was borne by residential starts while nonresidential and nonbuilding starts continued their recovery from the COVID-19 pandemic.
“The weight of higher material prices and a lack of skilled labor are having a direct and notable influence on residential construction activity,” says Richard Branch, chief economist for Dodge Data & Analytics. “These negative factors are expected to continue to impact the sector over the remainder of the year and will result in a less positive influence from housing on overall levels of construction activity. While feeling similar effects, the nonresidential sector continues its modest recovery off the lows of last summer. There are enough projects in the planning pipeline to suggest this trend should continue into next year, but higher material prices will result in longer lead times to groundbreaking and more temperate improvements in nonresidential starts.”
Below is the full breakdown:
Nonbuilding construction starts rose 5 percent in May to a seasonally adjusted annual rate of $199.2 billion. The utility and gas plant category increased 22 percent due to the start of a large transmission line, while highway and bridge starts rose 9 percent and environmental public works moved 8 percent higher. The miscellaneous nonbuilding category lost 33 percent in May. Year-to-date through the first five months of 2021, total nonbuilding starts were 8 percent higher than in 2020. Environmental public works were up 37%, while utility/gas plant and miscellaneous nonbuilding starts were up 25 percent and 11 percent, respectively. Highway and bridge starts were down 10 percent through five months.
For the 12 months ending May 2021, total nonbuilding starts were 5 percent lower than the 12 months ending May 2020. Environmental public works starts were 18 percent higher, while utility and gas plant starts were down 23 percent. Highway and bridge starts were down less than one percentage point and miscellaneous nonbuilding starts were 14 percent lower through five months.
The largest nonbuilding projects to break ground in May were the $915 million Gateway South transmission project in Medicine Bow, Wyo., the $795 million improvements to the West Davis Highway in Farmington, Utah, and a $528 million sewage reclamation project in Salt Lake City.
Nonresidential building starts jumped 10 percent in May to a seasonally adjusted annual rate of $309.5 billion. Manufacturing starts more than doubled over the month as a large refinery broke ground. Commercial starts gained 6 percent, with only the office category losing ground. Institutional starts were down 2 percent in May, despite a large increase in health-care projects. Year-to-date, total nonresidential building starts were down 5 percent compared to the first five months of 2020. Institutional starts were 9% lower, while commercial starts were down 7 percent. Manufacturing starts were up 42 percent on a year-to-date basis.
For the 12 months ending May 2021, nonresidential building starts were 19 percent lower than the 12 months ending May 2020. Commercial starts were down 20 percent, while institutional starts fell 14 percent. Manufacturing starts dropped 43 percent in the 12 months ending May 2021.
The largest nonresidential building projects to break ground in May were the $1.5 billion Diamond Green Diesel refinery in Port Arthur, Texas, the $920 million Michigan Medicine Clinical Inpatient Tower in Ann Arbor, Mich., and the $475 million University of California Living and Learning dorm project in San Diego.
Residential building starts lost 10 percent in May to a seasonally adjusted annual rate of $394.2 billion. Single family starts were 12 percent lower, while multifamily starts dropped 7 percent. Year-to-date, total residential starts were 30 percent higher than the same period a year earlier. Single family starts were up 37%, while multifamily starts were 12 percent higher.
For the 12 months ending May 2021, total residential starts were 18 percent higher than the 12 months ending May 2020. Single family starts gained 27 percent, while multifamily starts were down 2 percent on a 12-month sum basis.
The largest multifamily structures to break ground in May were a $500 million mixed-use project in Brooklyn, N.Y., the $230 million Mather Senior Living Community in McLean, Va., and the $160 million Alcove Tower in Nashville, Tenn.
Regionally, May’s starts rose in the Midwest, South Atlantic and West regions but fell in the Northeast and South Central regions.