Construction Starts End 2020 on a Sour Note
Total construction starts lost 5 percent in December, falling to a seasonally adjusted annual rate of $784.3 billion. Nonresidential building starts fell 11 percent during the month and starts were lower in three of the four regions in December; the South Central was the only region to post an increase.
For the full year, total construction starts fell 10 percent to $766.3 billion. Nonresidential building starts saw the steepest drop, losing 24 percent. In December, the Dodge Index fell 5 percent to 166 (2000=100) from the 174 reading in November. For the full year, the Dodge Index averaged 163, a 10 percent decline from 2019’s average.
“The roller coaster year of 2020 is over, but not forgotten,” says Richard Branch, chief economist for Dodge Data & Analytics. “The scars from the pandemic and recession will be long lasting and resulted in significant declines across most construction sectors. Single family housing, warehouse, and highway and bridge starts were bright spots that cannot be understated for their gains. There will be difficult months ahead for the economy and for construction starts as COVID-19 cases mount. However, the continued roll out of vaccines means 2021 will be a better year.”
Nonresidential Building December performance
Nonresidential building moved 11 percent lower in December to a seasonally adjusted annual rate of $225.3 billion following a sizeable increase in the previous month. Commercial starts fell 23 percent over the month as office, hotel, and warehouse starts all posted double-digit declines. Institutional starts fell 5 percent, while manufacturing starts rose 59 percent, thanks to the largest nonresidential building project to get started in December, the $600 million Gulf Coast Ammonia Plant in Texas City, Texas. Also starting in December were the $341 million Orlando Health Jewett Orthopedic Hospital in Orlando and the $325 million University of Massachusetts Education and Research Building in Worcester, Massachusetts.
Nonresidential Building in 2020
In 2020, nonresidential building starts lost 24 percent to $239.9 billion—the lowest level since 2015. Commercial starts tumbled 26 percent over the year, with warehouse construction eking out a 1 percent gain in 2020. Institutional starts fell 13 percent last year, while manufacturing start dropped 59 percent.