The value of new construction starts in April dropped 13% from the previous month to a seasonally adjusted annual rate of $647.8 billion, according to Dodge Data & Analytics. The decline followed three straight months of gains, which saw total construction activity rising 20% from the lackluster amount reported back in December.  

Much of April’s slide for total construction reflected a steep 39% plunge by the nonbuilding construction sector, which had been lifted in March by the start of two large pipeline projects—the $4.2-billion Rover natural gas pipeline in Ohio and Michigan, and the $2.5-billion Mariner East 2 propane and natural gas liquids pipeline in Pennsylvania.  

Meanwhile, residential building slipped a more moderate 5% in April, and nonresidential building receded only a slight 1%, as it basically held steady with its pace in February and March. During the first four months of 2017, total construction starts on an unadjusted basis were $213.9 billion, down 4% from last year’s January-April period.

If the volatile manufacturing plant and electric utility and gas plant categories are excluded, total construction starts during the first four months of 2017 would be up 4% compared to last year.

April’s data lowered the Dodge Index to 137 (2000=100), compared to 157 for March and the 152 average for the first quarter of 2017, yet still above December’s 131.

“The construction start pattern so far in 2017 can be characterized as three steps forward and one step back, as the often-hesitant pattern of the construction expansion continues,” said Robert A. Murray, chief economist for Dodge Data & Analytics.

“The first three months of this year drew support from a number of very large projects, most notably several massive pipeline and airport terminal projects,” Murray said.  

“While April did include a groundbreaking for the $1.3-billion Oceanwide Center mixed-use complex in San Francisco, comprised of two high-rise towers, the boost from very large projects in April was generally less than what occurred during the first three months of this year,” he said.

“In addition, both residential building and public works had been trending upward through March, but then experienced a pause in April. In contrast, nonresidential building in April was able to remain essentially stable. On the plus side for construction, Congress in early May passed a continuing resolution for fiscal 2017 appropriations that includes a small increase for highway spending, bringing it up to levels called for by the FAST Act (the multiyear federal transportation legislation). And long-term interest rates have steadied for the time being, following the increases that were reported in late 2016 and early 2017,” Murray added.

Nonbuilding Construction

Nonbuilding construction was $119.0 billion (annual rate) in April, down 39% from its heightened March amount. The nonbuilding sector had registered steady growth during the first three months of 2017, with March activity up 16% from nonbuilding’s average pace during 2016.  

The public works categories as a group plunged 48% in April, with much of the decline coming from an 83% slide for the miscellaneous public works category, which includes such diverse project types as pipelines, mass transit, outdoor sports stadiums and sitework.  

Miscellaneous public works in March included the $4.2-billion Rover natural gas pipeline in Ohio and Michigan, the $2.5-billion Mariner East 2 pipeline in Pennsylvania, which will transport propane and other natural gas liquids, and the $300-million stadium for the DC United soccer team in Washington, D.C.  

By contrast, the largest miscellaneous public works project entered as an April start was the $200-million portion of the Sound Transit East Link light rail project in Seattle.  

Sewer construction also experienced a sharp April decline, falling 41%. Highway and bridge construction in April fell 10%, retreating from its improved volume in March.  

The top five states in terms of dollar amounts of highway and bridge construction starts in April were Florida, Ohio, Texas, Iowa and Pennsylvania. On the plus side for public works, April gains were reported for water supply construction, up 9%; and river and harbor development, up 10%, with the help of a $200-million ferry dock project in Seattle.  

The electric utility and gas plant category in April climbed 71% from a weak March, aided by the start of six large wind farms located in Ohio ($450 million), Texas ($342 million), Illinois ($315 million), Iowa ($255 million and $252 million) and New York ($156 million).

 

Residential Building

Residential building, at $295.4 billion (annual rate), settled back 5% in April.  Single-family housing slipped 6% in April, retreating for the second month in a row after showing modest improvement during the fourth quarter of 2016 and the first two months of 2017.  

April’s pace for single-family housing was still 5% above the average monthly pace during 2016. By geography, single-family housing in April showed this performance relative to March: the South Atlantic, down 11%; the West, down 5%; the Midwest, down 4%; the South Central, down 3%; and the Northeast, up 2%.  

Multifamily housing in April receded 3% from March. Seven multifamily projects valued at $100 million or more reached groundbreaking in April, led by the $387-million multifamily portion of San Francisco’s Oceanwide Center; the $349-million multifamily portion of the $500-million One Beverly Hills mixed-use complex in Beverly Hills, Calif.; and the $280-million One South Halstead apartment tower in Chicago.  

In April, the top five metropolitan areas in terms of the dollar amount of multifamily starts were, in order: San Francisco, Los Angeles, New York City, Chicago and Washington, D.C. Through the first four months of 2017, the top five metropolitan areas were the same, although in this order: New York City, Los Angeles, Chicago, Washington, D.C. and San Francisco.

Nonresidential Building

Nonresidential building in April was $233.4 billion (annual rate), down 1% from March. The commercial building categories as a group were up 6% in April, led by a 24% increase for office buildings.

Five office building projects valued at $100 million or more reached groundbreaking in April, led by the $780-million office portion of San Francisco’s Oceanwide Center; the $321-million office portion of a $420-million office and retail high-rise in Charlotte, N.C.; and a $300-million Facebook data center in Fort Worth, Texas.  

The commercial garage category rose 14% in April, lifted by $99 million for the garage portion of Charlotte’s $420-million office and retail high-rise, while hotel construction rose 5%, with the lift coming from $106 million for the hotel portion of Beverly Hills’ One Beverly Hills mixed-use complex; $98 million for a convention center hotel in Irving, Texas; and $95 million for the hotel portion of San Francisco’s Oceanwide Center.  

On the negative side, both stores and warehouses retreated in April, falling 7% and 20% respectively. The manufacturing plant category in April jumped 147% after its weak March total, helped by the start of a $240-million livestock processing facility in Iowa and a $200-million wood-processing facility in Michigan.

The institutional categories as a group fell 16% in April. Much of the downturn came from an 85% plunge for the transportation terminal category, which had been lifted in March by the start of two projects at Los Angeles International Airport—the $1.9-billion Delta relocation to Terminals 2 and 3, and the $961-million Midfield Satellite Concourse North (phase 1).  

Also sliding back in April were public buildings (courthouses and detention facilities), down 10%; and health care facilities, down 3%. On the plus side, educational facilities increased 12%, helped by large high school projects in Snoqualmie, Wash. ($156 million) and Billerica, Mass. ($141 million), as well as groundbreaking for Columbia University’s new $150-million business school facility in New York City.  

April gains were also reported for religious buildings, up 43%; and amusement-related construction, up 50%. The amusement category was lifted by the start of the $390-million Dickies Arena in Fort Worth and the $200-million Vessel at Hudson Yards in New York City, which is a 150-ft-tall, interconnected stairway located in a five-acre plaza at the Hudson Yards development.

The 4% downturn for total construction starts on an unadjusted basis during the January-April period of 2017 came as the result of a mixed performance by major sectors.

Nonbuilding construction dropped 21% year-to-date, with electric utilities and gas plants down 68% while public works climbed 5% (reflecting the sharp gains for pipeline projects in early 2017).  

Residential building was unchanged year-to-date, with single-family housing up 7%, while multifamily housing retreated 16%. Nonresidential building increased 5% year-to-date, with institutional building up 23%, commercial building down 6% and manufacturing building down 30%.

By major region, total construction starts in the first four months of 2017 showed this pattern: the South Central, down 20%; the Northeast, down 9%; the West, down 1%; the Midwest, up 1%; and the South Atlantic, up 10%.

Added perspective is made possible by looking at 12-month moving totals, in this case, the 12 months ending April 2017 versus the 12 months ending April 2016.  On this basis, total construction starts were up 3%.  

By major sector, nonbuilding construction dropped 10%, with electric utilities and gas plants down 42% while public works grew 4%. Residential building advanced 3%, with single-family housing up 7% while multifamily housing fell 5%.  Nonresidential building increased 12%, with institutional building up 15%, manufacturing building up 12%, and commercial building up 10%.  

By major region, the 12 months ending April 2017 showed this pattern for total construction starts: the South Central, down 9%; the Northeast, down 4%; the Midwest, up 7%; the West, up 8%; and the South Atlantic, up 13%.