Total construction starts took a turn in January, falling 27% to a seasonally-adjusted annual rate of $865.6 billion, according to Dodge Construction Network. Last month, nonresidential building starts fell 38%, residential starts decreased by 20%, and nonbuilding starts declined by 16%.

Compared to January 2022, total construction was 14% lower in January 2023. Nonresidential building starts were down 2%, residential fell 34%, and nonbuilding starts rose 10%. For the year ending January 2023, total construction starts were 13% higher than the year ending January 2022. Nonresidential starts were 36% higher, residential starts fell 6%, and nonbuilding starts were up 19%.

“January’s decline in construction starts should not be taken as the beginning of a cyclical downturn in the industry,” said Richard Branch, chief economist for Dodge Construction Network. “Numerous mega-projects have begun over the last few months, obscuring the underlying trend in construction activity. While some construction sectors will face stress as the year progresses, current fundamentals point to an industry that is fairly well positioned to weather the storm.”

The decline in nonbuilding starts was primarily due to a 76% dip in utility/gas plant starts. Aside from this, environmental public works starts, miscellaneous nonbuilding, and highway and bridge starts each rose. For the year ending January 2023, all of these nonbuilding sectors rose compared to the same period ending January 2022. 

The largest nonbuilding projects to break ground in January were the $750 million High Banks wind farm in Belleville, Kansas, the $570 million first phase of the Highway 69 express toll lanes in Overland Park, Kansas, and the $492 million CEPP/EAA reservoir in Palm Beach, Florida.

The fall in nonresidential building starts can be attributed to a 91% decline in manufacturing starts following the start of several large projects in December. Commercial starts dropped 11%, and institutional starts increased by 3%. For the year ending January 2023, manufacturing starts were 190% higher, commercial starts gained 22%, and institutional starts increased by 17% compared to the year ending 2022. The largest nonresidential projects to break ground last month were the $1 billion Prime Data Center campus in Elk Grove Village, Illinois, and the $515 million Amazon data center in Hilliard, Ohio. 

In the residential building sector, single-family starts fell by 5% and multifamily starts dipped 37%. For the year ending January 2023, residential starts were 5% lower than the year ending January 2022, with single-family starts 16% lower and multifamily starts up 21%. The largest multifamily projects to break ground in January were a $200 million mixed-use structure in Gowanus, New York, and a $172 million mixed-use building in Greenpoint, New York.

Regionally, total construction starts in January fell in all five regions.