Rise in Residential Projects Contribute to Increase in July Total Construction Starts

The number of total construction starts rose 17% in July 2023 to a seasonally adjusted annual rate of $1.2 trillion, reports Dodge Construction Network (DCN). This follows a 9% decrease in June, which was led by a substantial drop in nonresidential construction starts.

Despite the overall increase in construction starts, year-to-date total starts were 7% below that of 2022. Residential and nonresidential starts were down 21% and 7%, respectively. Pictured: Cincinnati. Photo courtesy of Sean Foster.

July’s increase was led by a 38% rise in nonbuilding starts and a 20% increase in residential starts. Nonresidential starts fell by 6%.

Despite the overall increase in July, year-to-date total construction starts were 7% below that of 2022. Residential and nonresidential starts were down 21% and 7%, respectively.

“Construction starts have plateaued and are making little headway,” says Richard Branch, DCN’s chief economist. “Higher interest rates, labor shortages and material prices continue to impact the flow of construction starts—resulting in little forward momentum over the last 12 months. The lag in nonresidential building projects entering the planning stage will slow starts as the year progresses, which should be offset by rising infrastructure activity.”

Nonresidential Building Starts

Nonresidential building starts fell 6% in July to a seasonally adjusted annual rate of $334 billion. Commercial starts rose 11% due to gains in warehouse starts, offsetting a decline in office and hotel starts. Institutional starts were down 11%, with education, dormitories and religious the only categories to report increases. Manufacturing starts dropped 39% in July.

Year-to-date through July, total nonresidential starts were 7% lower than that of 2022. Institutional starts gained 8%, while manufacturing and commercial starts fell 9% and 31%, respectively.

The largest nonresidential building projects to break ground in July were the $405 million Envision AESC BMW components manufacturing plant in Florence, S.C., the $370 million Wisteria at Warner Center office building in Los Angeles, and the $277 million first phase of an airside concourse at Orlando International Airport in Florida.

Residential Starts

Residential building starts rose 20% in July to a seasonally adjusted annual rate of $414 billion. Single-family starts gained 2%, while multifamily starts rose 62%. Year-to-date through July 2023, total residential starts were down 21%. Single-family starts were 25% lower, and multifamily starts were down 14%.

The largest multifamily structures to break ground in July were the $1 billion Clarkson Square condo and apartment building in New York City, the $365 million Queensbridge Collective residential tower in Charlotte, and the $358 million Oasis Hallandale tower in Hallandale Beach, Fla.