In a new Dodge Construction Network report, total construction starts fell 12% in March to a seasonally-adjusted annual rate of $903.8 billion following a strong February. The decline, in which nonresidential building starts fell 29%, is in part due to the start of three large manufacturing facilities in the prior month. This is the first time so far in 2022 that total construction starts have decreased. 

Without those three large projects, however, nonresidential starts in March would have risen 10%. In addition, residential starts fell 3% and nonbuilding starts lost 2%. 

Total construction was 9% higher in the first three months of 2022 than in the same period of 2021. Nonresidential building starts rose 26%, residential starts increased 3%, while nonbuilding starts were 1% lower. For the 12 months ending March 2022, total construction starts were 15% above the 12 months ending March 2021. Nonresidential starts were 25% higher, residential starts went up 15%, and nonbuilding starts fell 1%. 

“The volatility caused by the ebb and flow of large projects masks an underlying trend of strengthening in construction starts,” said chief economist for Dodge Construction Network, Richard Branch. “Nonresidential construction has benefited from the growing confidence that the worst of the pandemic is in the rear-view window. The pipeline of projects waiting to start continues to fill, suggesting this trend will continue. However, higher prices and a shortage of skilled labor will slow the progress of those projects through the design and bidding stages, resulting in moderate growth in starts activity.”

In the nonbuilding sector, starts in the environmental public works category rose 35% and miscellaneous nonbuilding improved by 10%. However, starts for highway and bridge projects fell 7% and utility/gas plant starts decreased 40% in March. And, for the 12 months ending March 2022, total nonbuilding starts were 1% lower than in the 12 months ending March 2021. During this period environmental public work, utility/gas plant, and highway and bridge starts all rose compared to the year prior, while miscellaneous nonbuilding starts yielded a 30% loss. 

Last month, single-family starts fell 5%, but multifamily starts rose 4% in the residential building sector. For the 12 months ending March 2022, residential starts improved 15% from the 12 months ending March 2021. Single-family starts were 11% higher and multifamily starts rose 29%. 

As stated previously, the decline in nonresidential building starts in March followed a large gain in manufacturing activity in February. However, commercial starts rose 8% due to gains in office, hotel, and warehouse starts. Institutional starts also increased, yielding a 9% gain. Compared to the year ending in March 2021, nonresidential building starts were 25% higher in the period ending March 2022. Commercial starts were up 21%, institutional starts increased by 12%, and manufacturing starts jumped 162%. 

Regionally, total construction starts in March rose in the South Atlantic but fell in all other regions.