At a seasonally adjusted annual rate of $490.2 billion, new construction starts in August advanced 2% relative to July, it was reported by McGraw Hill Construction, a division of McGraw Hill Financial. Residential building stayed on the upward track, and nonbuilding construction (public works and electric utilities) rebounded after its loss of momentum in July. 

At the same time, nonresidential building retreated from its improved July amount, continuing the up-and-down pattern present during 2013.  For the first eight months of 2013, total construction starts on an unadjusted basis came in at $329.4 billion, up 1% from the same period a year ago.  If electric utilities are excluded from the year-to-date statistics, total construction starts in the first eight months of 2013 would be up 10%.

The August data lifted the Dodge Index to 104 (2000=100), compared to a revised 102 for July.  So far during 2013, the Dodge Index has hovered within the range of 98 to 106, after averaging 103 for the full year 2012. 

“On balance, the construction industry is showing modest growth in 2013, although by major sector there’s been divergent behavior,” stated Robert A. Murray, vice president of economic affairs for McGraw Hill Construction. “Housing continues to lead the way, with consistent gains reported for both single and multifamily housing. Public works has edged up slightly from last year, helped by the start of several very large projects and withstanding for now the negative impact of the sequester. New electric utility starts have fallen substantially from last year’s record volume.

"However, it’s been more problematic to discern this year’s trend for nonresidential building—the commercial categories are hesitantly picking up the pace, but the institutional categories are still languishing. A more solid expansion for total construction requires a greater contribution from nonresidential building, which has yet to occur.”

Residential Building

Residential building in August increased 4% to $214.1 billion (annual rate).  Single-family housing grew 2%, maintaining the steady growth that’s been present during 2013. While the month-to-month increases have been smaller than last year, the consistent gains have enabled the pace for single-family housing in August to be 11% higher than the start of this year, and 30% higher than the average monthly pace reported during 2012. 

By geography, single-family housing in August revealed this pattern—the Midwest, up 4%; the South Atlantic and Northeast, each up 3%; the West, up 2%; and the South Central, down 1%.  Since May, the 30-year fixed mortgage rate has moved up from 3.5% to 4.5%, but this increase in the cost of financing has not had much if any negative impact on homebuyer demand and single family construction.

Multifamily housing in August jumped 12%, achieving the second highest monthly amount so far in 2013. Large multifamily projects that reached groundbreaking in August included a $110-million apartment building in Cambridge, Mass., two apartment buildings in Brooklyn, N.Y., valued at $105 million and $103 million respectively, and a $103-million apartment building in Boston.

The top five metropolitan areas for multifamily starts in August were New York, Boston, Miami, San Francisco and Los Angeles.

Nonbuilding Construction

Nonbuilding construction, at $127.3 billion (annual rate), climbed 11% in August. Highway and bridge construction had a strong month, jumping 30%. Large projects that lifted the highway and bridge total in August were the $798-million Horseshoe Project in Dallas, involving replacement of bridges over the Trinity River and road upgrades, and the $743-million Bayonne Bridge project in Bayonne, N.J., involving raising the bridge roadway from 151 ft above the water to approximately 215 ft. The top five states for new highway and bridge construction starts in August were Texas, New Jersey, New York, California and Illinois.

The miscellaneous public works category, which includes such project types as pipelines and mass transit, increased 6% in August. Large projects that supported the miscellaneous public works total were a $300-million shale pipeline in Texas and a $133-million rail tunnel for Amtrak under the Hudson Yards site in New York.