Total Construction Starts Decline in August
September 28, 2021
Total construction starts fell 9 percent in August to a seasonally adjusted annual rate of $782.8 billion, according to Dodge Data & Analytics. Nonresidential building starts fell 13 percent.
“Construction starts have hit a rough patch following the euphoria seen in the early stages of recovery from the pandemic,” says Richard Branch, chief economist for Dodge Data & Analytics. “The Delta variant has raised concern that the fledgling economic recovery is stalling out, undermining the already low level of demand for most types of nonresidential buildings. Additionally, significant price increases for construction materials, logistic constraints, and labor shortages are making a challenging situation worse. Construction starts are likely to remain unsteady over the next few months. However, the dollar value of projects entering planning continues to suggest that the recovery in construction starts should resume early in the new year.”
Regionally, total construction starts lost ground in August in all five regions.
Nonresidential building starts fell 13 percent in August to a seasonally adjusted annual rate of $244.9 billion. The declines were broad-based across building types with few bright spots. Commercial starts dropped 10 percent, institutional starts lost 15 percent, and manufacturing starts fell 37 percent following a sizable gain in July. Despite overall losses, there were gains in the retail, parking, and public buildings. Year-to-date through eight months, nonresidential building starts were 3 percent higher. Commercial starts increased 2 percent and manufacturing starts were 33 percent higher. Institutional starts, however, were 1 percent lower through eight months.
For the 12 months ending in August 2021, nonresidential building starts were 8 percent lower than in the 12 months ending in August 2020. Commercial starts were down 8 percent, institutional starts fell 4 percent, and manufacturing starts dropped 29 percent in the 12 months ending August 2021.
The largest nonresidential building projects to break ground in August were the $800 million first phase of the Facebook Eastmark Parkway data center in Mesa, Arizona, the $400-million Facebook data center in Springfield, Nebraska, and the $350 million Pratt & Whitney Project Ranger manufacturing building in Asheville, North Carolina