Construction Starts Slip in April as Housing Cools

Dodge Data & Analytics reported that total construction starts fell 2% in April to a seasonally adjusted annual rate of $853.5 billion. Single-family construction posted a sizeable decline following months of strong activity, while nonresidential building and nonbuilding starts both increased.

“The pullback in single family construction starts was inevitable after showing exceptional strength over the past year,” said Richard Branch, chief economist for Dodge Data & Analytics. “Higher material prices, supply shortages, and a dearth of skilled construction labor were bound to catch up with housing and will ultimately limit the ability of this sector to show the same rate of expansion this year as it did last. Meanwhile, nonresidential starts are stabilizing and should continue to heal throughout 2021, however, this sector will also be challenged by similar issues facing the housing market that will cause its starts to be below pre-pandemic levels for months to come.”

Nonresidential building starts rose 16% in April to a seasonally adjusted annual rate of $276.3 billion. Institutional building starts rose 19%, driven by education, transportation, and recreation buildings, while commercial starts rose 12% due to gains in the office and warehouse categories. Manufacturing starts also increased in April, climbing 25%. On a year-to-date basis, nonresidential building starts were 17% lower than during the first fourmonths of 2020. Commercial starts were down 20%, while institutional starts were down 18%. Through the first four months of 2021, manufacturing starts were up 13%.

The largest nonresidential building projects to break ground in April were a $1.2 billion conversion of a storage building to an office project in New York, the $530 million Mickey Leland International Terminal in Houston,  and a $325 million Amazon office project in Bellevue, Wash.

Residential building starts fell 12% in April to a seasonally adjusted annual rate of $387.8 billion. Single-family starts fell 18%, while multifamily starts rose 5%. On a year-to-date basis, total residential starts were 24% higher. Single-family starts were up 31%, while multifamily starts were 6% higher.

The largest multifamily structures to break ground in April were the $232 million Travis Residential Tower 1 in Austin, Texas, the $173 million 241 W 28th St. mixed-use project in New York,  and the $165 million Union Square Tower in Somerville, Mass.

April’s starts rose in the Northeast and Midwest regionally but fell in the West, South Central, and South Atlantic regions.