Nonbuilding Construction

Nonbuilding construction, at $120.1 billion (annual rate), dropped 12% in August. The public works group as a whole was down 6%, due primarily to a 30% slide for the “miscellaneous public works” category. In July, the miscellaneous public works category included $1.2 billion for work on Phase 2 of the Dulles Corridor MetroRail project in northern Virginia. By contrast, the largest miscellaneous public works project entered as an August start was a $267-million runway reconstruction at JFK International Airport in New York City.

Also losing momentum in August were river/harbor development, down 1%; and sewer construction, down 7%. On the plus side, the water supply category grew 7% in August, and gains were reported for both highways, up 7%; and bridges, up 9%.  On a year-to-date basis, highways and  bridges together were down 15% from last year.

Electric utility construction in August decreased 33%, resuming the downward trend that’s been present for the past year-and-a-half. August did include the start of a $775-million natural gas-fired power plant in Maryland, a $260-million hydroelectric power plant in Iowa, and a $222-million wind farm in North Dakota, but these were not enough to avert the month’s downturn for electric utility starts.

Residential Building

Residential building in August grew 2% to $235.6 billion (annual rate).  Multifamily housing provided the upward push, increasing 10%. The largest multifamily projects that were entered as August starts were the $718-million multifamily portion of the Nordstrom Tower in New York City, a $420-million apartment building in New York City, a $198-million condominium building in San Francisco, a $169-million multifamily building in Boston, and a $150-million multifamily project in Dallas that  involves redevelopment of an office building into residential apartments. 

Through the first eight months of 2014, the metropolitan area with the highest dollar amount of multifamily starts was New York City, up 60% from the previous year. Rounding out the top five metropolitan areas for multifamily construction starts (with the percent change from a year ago) were: Washington, D.C., up 47%; Los Angeles, up 55%; Miami, up 25%; and San Francisco, up 47%.

Single-family housing in August slipped 1%, staying basically flat with the level that was reached towards the end of 2013. In August, reduced single family construction was reported in the West, down 3%; and the South Central, down 2%; while slight 1% gains were reported in the Northeast, the Midwest and the South Atlantic regions.

“The recovery for single-family housing has now been stalled for two-thirds of 2014,” Murray noted. “It remains to be seen whether the recent easing of lending standards for residential mortgages, as indicated by the Federal Reserve’s survey of bank lending officers, will be able to help single-family housing regain its upward track.”

The 4% increase for total construction starts on an unadjusted basis during the January-August period of 2014 was due to a mixed pattern by major construction sector. Nonresidential building year-to-date advanced 13%, with this performance by segment: commercial building, up 7%; manufacturing building, up 132%; and institutional building, up 1%.  Residential building year-to-date increased 5%, with single-family housing up only 1% while multifamily housing jumped 19%. Nonbuilding construction year-to-date dropped 9%, with public works down 11% and electric utilities down 2%.

By geography, total construction starts in the first eight months of 2014 showed gains in three regions—the South Central, up 15%; the Northeast, up 5%; and the West, up 1%. Total construction starts in the South Atlantic held even with the same period a year ago while the Midwest reported a 1% decline.