The August Dodge Momentum Index (DMI) reading dipped 6.5% to 178 from the revised July reading of 190.3. Over the month, the commercial component of the DMI fell 1.6%, and the institutional component saw a double-digit decline of 14.8%.

The notable contraction in the institutional sector was driven by a deceleration in education, healthcare, and amusement planning activity. Stronger hotel planning made up for weaker office activity resulting in a milder drop in the commercial component. Year over year, the DMI remained 4% higher than in August 2022, with the commercial and institutional sectors up 3% and 7%, respectively.

“Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth,” said Associate Director of Forecasting for Dodge Construction Network, Sarah Martin. “It’s likely that the full year of tightening lending standards and high interest rates has begun to affect institutional planning, which has otherwise been resistant to these market headwinds. Also, planning in the sector continues to revert from the strong spike in activity back in May. As we move into the final four months of 2023, both commercial and institutional planning will continue to be constrained.”

A total of 22 projects valued at $100 million or more entered planning in August. The largest commercial projects included the $322 million Phase 5 of the Northern Virginia Gateway Data Center in Fredericksburg, Virginia, and the $225 million Kroger’s Distribution Center in Las Vegas, Nevada. The largest institutional projects to enter planning included the $420 million Westborough Life Sciences Park in Westborough, Massachusetts, and the $168 million Freeman Health System Hospital in Pittsburg, Kansas.