Total construction starts continue to fluctuate, with a 9% dip in June resulting in a seasonally adjusted annual rate of $1 trillion, according to the latest Dodge Construction Network report. Nonresidential starts led the decline, falling 14%. Nonbuilding starts fell 9%, and residential starts dropped 4%. 

Year-to-date through June 2023, total construction starts were 5% below that of 2022. Residential and nonresidential starts were down 24% and 2%, respectively, while nonbuilding increased by 29%. For the 12 months ending June 2023, total construction starts were 9% higher than that of 2022. Nonbuilding starts were 34% higher, and nonresidential building starts were up 25%; however, residential starts saw a 17% decline.

“Construction starts are oscillating — up one month and down the next,” said Dodge Construction Network chief economist Richard Branch. “The presence, or absence, of mega-projects is a key influencer in this trend. Nevertheless, high interest rates and tightening lending standards are leading to uncertainty among owners and developers, also creating hesitation among stakeholders, leading them to carefully assess whether projects will break ground. These conditions will persist through the remainder of the year — meaning little forward motion in construction starts.”

The fall in nonresidential building starts follows an aggressive growth in manufacturing starts in May. The sector was pulled by a 67% dip in manufacturing starts in June and a 6% decrease in commercial starts as gains in office and hotels were offset by a pullback in warehousing and parking structures. Institutional starts gained 15% in June due to healthcare and airport terminal work. The largest nonresidential project to break ground last month was the $2.6 billion JetBlue Terminal 6 at JFK Airport in New York. 

The decline in the nonbuilding sector was driven by a 43% fall in utility/gas plants and a 22% drop in highway and bridge starts. Environmental public works gained 1%, and miscellaneous nonbuilding starts more than doubled due to the start of a large stadium project. Year-to-date through June, utility/gas plants, miscellaneous nonbuilding starts, highway and bridge starts, and environmental public works all increased. The largest nonbuilding projects to break ground in June were the $2.6 billion Matterhorn Express Pipeline in Texas and the $1.4 billion Buffalo Bills stadium in Orchard Park, New York. 

In the residential sector, single-family starts increased by 8%, while multifamily starts fell 23%. On a year-to-date basis through June 2023, single-family starts were 27% lower, and multifamily starts were down 17%. The largest multifamily projects to break ground in June were the $500 million 1072 W Peachtree building in Atlanta, Georgia, the $450 million Pendry-One Ashley condo tower in Tampa, Florida, and the $345 million Merchant Building in Columbus, Ohio.

Regionally, total construction starts in June fell in all regions except the West and Northeast.