The miscellaneous public works category (which includes sitework, rail projects and pipelines) fell 43% in February, given the absence of very large projects following a January that included a $240-million railroad hub in New Mexico. River/harbor development also weakened in February, slipping 8%. At the same time, water supply construction in February edged up 1%, and sewer construction climbed 19% with the help of these projects – a $255-million wastewater treatment facility in Colorado, a $182-million garbage transfer station in New York, and a $91-million wastewater system in Florida.

Murray said, “Going forward, federal spending cuts under sequestration will restrain public works construction during 2013, although in a manner somewhat different from the pattern of construction starts in February.  Transportation-related public works were largely exempt from the spending cuts, while the EPA water infrastructure and the Corps of Engineers accounts were subject to reduced funding.”

Residential Building

Residential building in February advanced 11% to $197.6 billion (annual rate), bouncing back after a modest pause in January and maintaining the upward trend that gained traction during 2012. Multifamily housing had a particularly strong February, jumping 39% with the start of several very large projects – the $200-million multifamily portion of the Cira Center South project in Philadelphia, a $200-million apartment building in New York City, and a $117-million residential tower at the Atlantic Yards development in Brooklyn.

Single-family housing in February rose 5%, continuing to strengthen on a wide geographic basis. By major region, single-family housing in February showed gains in the South Atlantic, up 11%; the South Central and West, each up 4%; the Northeast, up 3%; and the Midwest, up 1%.

Murray stated, “This year’s prospects for housing are bright, even with a sluggish economy. The demand for single-family housing is picking up, as shown by the improvement in home sales and home prices while inventories are currently very low. Multifamily housing continues to see rising occupancies and rents, and condominium projects are now joining the upward path that’s already well established for apartments.”

The 5% gain for total construction starts on an unadjusted basis during the first two months of 2013, compared to 2012, was the result of a varied performance by major sector. Residential building led the way, climbing 32% year-to-date, with single-family housing up 35% and multifamily housing up 20%.

Nonresidential building in the first two months of 2013 was down 7% from last year. While commercial building showed a year-to-date increase of 20%, weaker activity was reported for the manufacturing and institutional segments, each down 20%. Nonbuilding construction during the first two months of 2013 dropped 9% from last year, as a 9% gain for public works was outweighed by a 53% decline for electric utilities.

By region, total construction starts for the January-February period of 2013 revealed this behavior compared to last year – the Northeast, up 25%; the South Atlantic, up 12%; the South Central, up 10%; the Midwest, down 2%; and the West, down 10%.
Useful perspective is also obtained by looking at 12-month moving totals, in this case the 12 months ending February 2013 versus the 12 months ending February 2012.

On this basis, total construction starts were up 8%, as the result of the following performance by sector – residential building, up 31%; nonresidential building, down 8%; and nonbuilding construction, up 5%. By region, the 12 months ending February 2013 showed this pattern for total construction compared to the previous 12 months – the South Atlantic, up 19%; the South Central, up 14%; the Northeast, up 10%; the Midwest, up 9%; and the West, down 7%.