In June, total construction starts fell 5% to a seasonally adjusted annual rate of $932.3 billion, according to a new Dodge Construction Network report. Nonresidential building starts fell 14%, and residential starts dropped 6%. Nonbuilding starts, on the other hand, gained 13% last month due to the start of several large solar projects. 

Total construction, however, was 5% higher in the first half of 2022 compared to the same period of 2021. Nonresidential building starts rose 13%, and residential starts gained 3%, while nonbuilding starts fell 2%. For the 12 months ending June 2022, total construction starts were 7% above the 12 months ending June 2021. Nonresidential starts were 17% higher, residential starts increased by 5%, and nonbuilding starts were down 2%. 

“Construction markets are getting jittery as the odds of recession increase,” said Richard Branch, chief economist for Dodge Construction Network. “While projects are still moving through the planning process, the velocity has downshifted reflecting uncertainties over how rising interest rates will impact the economy, construction material prices, and ultimately, construction starts. Over the short-term, construction-facing indicators are likely to be more volatile than normal, particularly in the commercial sector.”

Behind the rise in nonbuilding construction starts in June was a gain in the utility/gas category. Miscellaneous nonbuilding starts saw a 21% increase in June, while highway and bridge starts fell 6%, along with a 16% dip in environmental starts. Through the first six months of this year, highway and bridge starts gained 15%, environmental public works projects fell 4%, miscellaneous nonbuilding starts dropped 19%, and utility/gas plants starts fell 28% compared to the same period in 2021. And, for the 12 months ending June 2022, environmental public works starts were up 3%, and street/bridge starts increased by 7%, while miscellaneous nonbuilding starts were 27% lower, and utility/gas plant starts were down 5%. 

The decline in nonresidential building starts last month is due to combined losses across commercial, manufacturing, and institutional starts with respective 16%, 14%, and 12% losses. Through the first six months of 2022, commercial starts gained 14%, and institutional starts rose 1%, while manufacturing soared with an 83% jump on a year-to-date basis. For the 12 months ending June 2022, commercial starts grew 13%, institutional starts gained 7%, and manufacturing starts saw a massive 109% increase on a 12-month rolling sum basis. 

In the residential building sector, single-family starts dropped 7%, and multifamily starts fell 3% last month. Through the first six months of 2022, multifamily starts were 23% higher than in the same period of 2021, while single-family housing dropped 4%. For the 12 months ending June 2022, single-family starts were 2% lower, and multifamily starts were 25% higher on a 12-month rolling sum basis. 

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