In a new Dodge Construction Network report, total construction starts rose 4% in May to a seasonally-adjusted annual rate of $979.5 billion. Nonresidential building starts rose 20%, while residential and nonbuilding starts declined 4% and 2%, respectively. 

In the first five months of 2022, total construction was 6% higher compared to the same period of 2021. Nonresidential building starts rose 17% and residential starts gained 3%, with nonbuilding starts falling 5%. For the 12 months ending May 2022, total construction starts were 10% above the same period ending May 2021. Nonresidential starts saw a 20% increase, residential starts gained 8%, and nonbuilding starts fell 3%.

“The construction sector has become increasingly bifurcated over the past several months,” said Dodge Construction Network chief economist Richard Branch. “Nonresidential building construction is clearly trending higher with broad-based resilience across the commercial, institutional and manufacturing spaces. However, growth in the residential market has been choked off by higher mortgage rates and rapidly falling demand for single-family housing. Nonbuilding starts, meanwhile, have yet to fully realize the dollars authorized by the infrastructure act. While the overall trend in construction starts is positive, the very aggressive stance taken by the Federal Reserve to combat inflation risks slowing the momentum in construction.”

The decline in nonbuilding starts in May can be attributed to environmental public works starts, which fell 14%, and miscellaneous nonbuilding starts, which declined 3%. Highway and bridge starts showed marginal growth and utility/gas plant starts jumped 22% over the month. Through the first five months of 2022, total nonbuilding starts were 5% lower than in 2021. Highway and bridge starts gained 22% between the two years, however, miscellaneous nonbuilding and utility/gas plant starts dropped 35% and 41%, respectively. And, for the 12 months ending May 2022, total nonbuilding starts were 3% lower than in the 12 months ending May 2021. 

In the nonresidential building sector, a large gain in office starts saw commercial starts rise 35% in May. Through the first five months of 2022, nonresidential building starts were 17% higher than in the same period ending May 2021. Most notably, manufacturing starts were 97% higher on a year-to-date basis. In the year-long period ending May 2022, nonresidential building starts were 20% higher than in the 12 months ending May 2021, with manufacturing starts swelling 116% on a 12-month rolling sum basis. 

For the residential building sector, single-family starts fell 10%, while multifamily starts rose 8%. Residential starts were 3% higher in the first five months of 2022 than in the first five months of 2021. Multifamily starts rose 21%, while single-family housing decreased by 3%. For the 12 months ending May 2022, residential starts improved 8% compared to the same period the year before, with single-family starts 2% higher and multifamily starts up 27%. 

Total construction starts in May rose in the Northeast, Midwest, and South Central regions, and fell in the South Atlantic and West.