At a seasonally adjusted annual rate of $650.5 billion, new construction starts in November dropped 12 percent from October, according to Dodge Data & Analytics. Nonresidential building fell 14 percent in November, retreating for the second month in a row after the sharp improvement reported in late summer. The nonbuilding construction sector, which can be volatile on a month-to-month basis, plunged 32 percent in November after its 28 percent hike in October, which included the start of two large natural gas pipeline projects.
Highway and bridge construction dropped 12 percent.
Meanwhile, residential building managed to edge up 1 percent in November, as an improved amount for single-family housing slightly outweighed a moderate pullback for multifamily housing.
“While total construction starts fell considerably during October and November, the declines came after an exceptionally strong September,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “If one takes the average of September, October, and November, total construction starts during that period would be down only 1 percent from the average of the previous eight months. On balance, the construction expansion has continued during 2017, although it’s true that the rate of growth has slowed from the 6 percent gain reported for 2016 as well as the 11 percent to 13 percent yearly gains reported from 2012 through 2015.
“Several features stand out about the pattern of construction starts during 2017,” Murray continued. “For nonresidential building, the upward momentum has shifted from commercial building to institutional building, and the manufacturing building category is no longer exerting a downward pull. For nonbuilding construction, public works has been lifted this year by an especially strong amount of pipeline starts, while highway and bridge construction has been steady and environmental public works has weakened. A further retreat by electric utilities and gas plants continues to depress the nonbuilding total.”
Nonresidential Building
Nonresidential building in November was $220.1 billion (annual rate), a 14 percent drop on top of October’s 31 percent decline, which followed gains of similar magnitude in September (up 34 percent) and August (up 10 percent). The institutional building segment in November descended 13 percent, with an especially steep 59 percent plunge for the amusement category, which in October had received support from the start of the $1.1 billion retractable roof ballpark for the Texas Rangers in Arlington, Texas, and a $240 million convention center expansion in Lexington, Ky.
By contrast, the largest amusement project entered as a November start was a $66 million recreational facility replacement in Madison, Wis. Weaker activity in November was also reported for public buildings (courthouses and detention facilities), down 51 percent; and transportation terminals, down 22 percent; although November did include a $175 million terminal improvement project at San Francisco International Airport.
On the plus side, educational facilities climbed 12 percent in November, aided by groundbreaking for a $421 million research laboratory at the University of California in Merced, Calif., a $237 million research facility at the University of California in San Francisco, and a $180 million corporate learning campus in Orlando. Healthcare facilities improved 4 percent in November, helped by the start of a $152 million hospital addition in Newark, Del., and the $150 million Oklahoma University medical center patient tower in Oklahoma City. Religious buildings also strengthened in November, rising 5 percent.
The commercial categories as a group dropped 9 percent in November. Warehouse construction fell 13 percent, despite the November start of two Amazon fulfillment centers, located in Salem, Ore., ($90 million) and the Baltimore area ($45 million). Hotel construction was down 10 percent in November, even with groundbreaking for the $300 million new tower at the Palace Station hotel in Las Vegas and the $127 million Loews Hotel at the Texas Live! development in Arlington, Texas.
Office construction slipped a relatively modest 3 percent in November, with support coming from such projects as a $219 million office tower in Camden, N.J., the $165 million Sentinel Square office building in Washington, D.C., and the $153 million FBI Central Records Complex in Winchester, Va.
Store construction in November was unchanged from its October amount. The manufacturing buildings category in November fell 38 percent from October that included a $675 million polyethylene plant and a $450 million petroleum refinery, both in Texas. The largest manufacturing projects entered as November starts were a $225 million Lockheed Martin production facility in Colorado and a $190 million upgrade to a Samsung Electronics facility in South Carolina.
Residential Building
For residential building, growth is being reported for the single-family side of the market, while multifamily housing appears to have peaked and is now retreating moderately.
Residential building in November was $302.1 billion (annual rate), up 1 percent from October. Single-family housing rose 4 percent, showing upward movement once again after the pause experienced earlier in the year.
Multifamily housing decreased 5 percent in November, retreating for the second month in a row as the number of very large projects that are reaching groundbreaking continues to settle back. In November, there were 6 multifamily projects valued each at $100 million or more.
Nonbuilding Construction
Nonbuilding construction in November was $128.4 billion (annual rate), down 32 percent from the previous month. The public works categories as a group fell 34 percent, including a 49 percent plunge for the miscellaneous public works category that includes such diverse project types as pipelines, rail mass transit and site work.
October had included the start of the $3.0 billion expansion of the Atlantic Sunrise natural gas pipeline in Pennsylvania and Virginia, plus the $750 million Epic natural gas pipeline in Texas. November did include one substantial project, the $2.0 billion Purple Line Project, which is a 16-mile light rail line in Maryland extending from Bethesda to New Carrollton, but the other miscellaneous public works projects entered as November starts were considerably smaller in scale.
Highway and bridge construction dropped 12 percent in November, retreating for the third month in a row following the improved activity reported in July and August. Additional public works declines in November were – sewer construction, down 6 percent; water supply construction, down 19 percent; and river/harbor development, down 64 percent. The electric utility/gas plant category in November receded 9 percent, although the latest month did include the start of several large power-related projects, including a $430 million wind farm in Nebraska, a $210 million natural gas-fired power plant in Massachusetts, and a $178 million transmission line project in Iowa.
Year-to-Date
During the first 11 months of 2017, total construction starts on an unadjusted basis were $687.1 billion, up 1 percent from a year ago. The year-to-date increase for total construction was restrained by a 39 percent downturn for the electric utility/gas plant category. Excluding electric utilities and gas plants, total construction starts during the first 11 months of 2017 would be up 4 percent compared to last year.
Through the first 11 months of 2017, nonresidential building advanced 7 percent compared to the same period a year ago. The institutional building group increased 14 percent year-to-date, led by a 127 percent jump for transportation terminals combined with a 7 percent gain for educational facilities. Additional year-to-date gains were reported for religious buildings, up 15 percent; and public buildings, up 4 percent; while the healthcare facilities category was flat and the amusement category slipped 5 percent.
Manufacturing building year-to-date climbed 32 percent, reflecting a rebound for petrochemical plant starts in 2017. The commercial building group retreated 5 percent year-to-date, with both office buildings and hotels down 6 percent, while store construction dropped 11 percent. Warehouse construction, up 9 percent, was the only commercial category to register a year-to-date increase.
During the January-November period of 2017, residential building grew 2 percent compared to last year. Single family housing climbed 8 percent, providing the lift to the residential total as the result of this year-to-date regional pattern – the South Atlantic, up 12 percent; the South Central and the West, each up 8 percent; the Midwest, up 5 percent; and the Northeast, down 1 percent. In contrast, multifamily housing registered a 12 percent year-to-date decline.
During the first 11 months of 2017, nonbuilding construction was down 7 percent from the same period a year ago. Much of the downward pull came from the 39 percent year-to-date decline for the electric utility/gas plant category, which continues to retreat from its exceptionally strong amount back in 2015. The public works categories as a group registered a 5 percent year-to-date gain.
The miscellaneous public works category surged 29 percent year-to-date, boosted by a 73 percent jump for natural gas and petroleum pipelines to $20.2 billion and a 116 percent jump for rail mass transit to $9.5 billion.
Highway and bridge construction edged up 1 percent year-to-date, stabilizing after the 9 percent decline reported for the full year 2016. The top five states ranked by the dollar amount of highway and bridge construction starts during the January-November period were – Texas, California, Florida, New York, and Pennsylvania. Each of the environmental public works categories registered year-to-date declines – river/harbor development, down 10 percent; sewer construction, down 12 percent; and water supply construction, down 19 percent.