Residential Building

Residential building, at $204.1 billion (annual rate), grew 3% in July.  Multifamily housing rebounded 20% after sliding 21% in June, regaining the heightened activity present earlier in 2013. Large multifamily projects that reached groundbreaking in July included a $390-million condominium complex in New York City, a $153-million mixed-use development in Boston and a $117-million apartment complex in San Diego. Through the first seven months of 2013, the leading metropolitan areas for multifamily construction starts (ranked by dollar volume) were: New York City, Washington, D.C., Boston, Miami and Dallas-Ft. Worth.

Single-family housing in July slipped 1% and over the past several months has essentially leveled off after the strong month-to-month gains that were reported throughout 2012 and early 2013. July’s volume of activity was still high by last year’s standards—up 26% from the average month.

Single-family housing in July showed greater activity in the Midwest, up 4%; but declined in the Northeast, South Central and West, each down 2%; and the South Atlantic, down 4%.

“The rise in mortgage rates in late spring generated some concern about the prospects for single family housing,” Murray said. “But mortgage rates have since eased back and the inventory of new homes for sale remains very low, which should encourage greater single family construction in the months ahead.”

Nonbuilding Construction

Nonbuilding construction in July dropped 18% to $113.8 billion (annual rate).  The public works portion of nonbuilding construction fell 20%, retreating after its 40% surge in June. Bridge construction in July was down 54%, following the robust amount of construction starts in June that included $1.6 billion for work on the Ohio River Bridges in the Louisville and the southern Indiana area, plus several other large bridge projects located in Massachusetts, Texas and New York.

Highway construction in July also pulled back from an elevated June, sliding 22%. Even with the reduced activity reported during July, highway and bridge construction through the first seven months of 2013 still maintained a 12% lead over the same period a year ago. Sewer construction also registered weaker activity in July, falling 13%. Public works categories that showed greater activity in July were dams and river/harbor development, up 2%; miscellaneous public works (sitework, pipelines, rail projects), up 3%; and water supply systems, up 32%.

The electric utility and gas plant category in July managed to increase 11% from very weak activity in June, helped by the start of a $270-million gas plant in Colorado and a $200-million solar power plant in New Mexico. The amount of electric utility and gas plant construction continues to be much lower than last year, with July’s volume down 82% from the average monthly pace for this category during 2012.

The 1% increase for total construction starts on an unadjusted basis during the first seven months of 2013 relative to last year was the result of divergent behavior by the three main construction sectors. Residential building, up 29% year-to-date, continues to lead the way during 2013, with single-family housing up 31% and multifamily housing up 21%. 

Nonresidential building saw its year-to-date shortfall relative to 2012 narrow, coming in 3% below last year at the seven-month mark. The major segments for nonresidential building showed the following year-to-date performance—commercial building, up 6%; institutional building, down 8%; and manufacturing plant construction, down 9%. Nonbuilding construction dropped 22% year-to-date as a 69% reduction for electric utilities far outweighed a 5% increase for public works.

By geography, total construction starts in the first seven months of 2013 revealed gains in three regions—the West, up 9%; and the South Central and the Northeast, each up 8%. Year-to-date declines were reported for two regions—the Midwest, down 1%; and the South Atlantic, down 14%. If electric utilities are excluded from the construction start statistics in the South Atlantic, then that region would register a 20% year-to-date gain.