February Construction Starts Descend 3 Percent

At a seasonally adjusted annual rate of $697.4 billion, new construction starts in February dropped 3 percent from the previous month, according to Dodge Data & Analytics. The February decline returned construction starts to the downward path that emerged during the closing months of 2018.

Two of the three main construction sectors registered weaker activity in February – nonbuilding construction fell 8 percent, due to a pullback by its public works segment, while residential building slipped 3 percent. Meanwhile, nonresidential building in February was able to hold steady with its January pace. During the first two months of 2019, total construction starts on an unadjusted basis were $99.3 billion, down 12 percent from the same period a year ago which had been lifted by the start of the $2.0 billion NEXUS natural gas pipeline in Ohio and Michigan and the $1.3 billion domed NFL stadium in Las Vegas.

On a 12-month moving total basis, total construction starts for the 12 months ending February 2019 were able to remain essentially even with the corresponding amount for the 12 months ending February 2018.

“The pace of construction starts has been lackluster in early 2019,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “…For residential building, single family housing remains sluggish, as affordability constraints continue to dampen demand even as mortgage rates have settled back, while a more cautious lending stance by banks may now be starting to restrain multifamily development. Nonresidential building so far in 2019 has not yet seen the same magnitude of very large projects that reached groundbreaking during 2018. At the same time, market fundamentals for warehouses and office buildings remain supportive for construction, and the large amount of funding coming from state bond measures passed in recent years should contribute to healthy levels of construction activity for such institutional project types as school construction.”