Dodge Data: Nonresidential Construction Gains Can’t Overcome Cooling in Single-family Housing Starts

Construction starts slipped in April as the once-hot single-family housing market cooled substantially due to higher building costs.

Construction Starts Chart April 2021 A
Dodge Data & Analytics

After showing surprising strength throughout much of the past year, single-family housing construction dropped 18% in April, pushing total construction starts down 2% to a seasonally adjusted annual rate of $853.5 billion, according to Dodge Data & Analytics. Gains in both nonresidential building and nonbuilding starts weren't sufficient to offset single-family's decline. Regionally, April’s starts rose in the Northeast and Midwest but fell in the West, South Central and South Atlantic regions.

“The pullback in single-family construction starts was inevitable after showing exceptional strength over the past year,” stated Richard Branch, chief economist for Dodge Data & Analytics. “Higher material prices, supply shortages and a dearth of skilled construction labor were bound to catch up with housing and will ultimately limit the ability of this sector to show the same rate of expansion this year as it did last.”

Multifamily starts fared better for the month, rising 5% in April. The largest multifamily structures to break ground were the $232 million Travis Residential Tower 1 in Austin, TX, the $173 million 241 W 28th St mixed-use project in New York, NY, and the $165 million Union Square Tower in Somerville, MA.

Overall, residential building starts fell 12% to a seasonally adjusted annual rate of $387.8 billion.

Nonbuilding and Nonresidential Starts

Nonbuilding construction starts were up 2% in April to a seasonally adjusted annual rate of $189.5 billion.

  • utility and gas plant category rose 5%
  • environmental public works gained 2%
  • highways and bridges rose 1%
  • miscellaneous nonbuilding dropped 3%

The largest nonbuilding projects to break ground were the $625 million Atkina Solar Power in Wharton County, TX, the $530 million New York Energy Solution Transmission Project in Claverack, NY, and the $357 million North City Pure Water Facility in San Diego, CA.

Nonresidential building starts rose by 16% in April to a seasonally adjusted annual rate of $276.3 billion.

  • institutional building starts rose 19%, driven by education, transportation and recreation buildings
  • commercial starts rose 12% due to gains in the office and warehouse categories
  • manufacturing jumped 25% for the month

The largest nonresidential building projects to break ground were a $1.2 billion conversion of a storage building to an office project in New York, NY, the $530 million Mickey Leland International Terminal in Houston, TX, and a $325 million Amazon office project in Bellevue, WA.

“Nonresidential starts are stabilizing and should continue to heal throughout 2021,” Branch indicated. “However, this sector will also be challenged by similar issues facing the housing market that will cause its starts to be below pre-pandemic levels for months to come.”

12-month and Year-to-date Activity

For the 12 months ending April 2021, total residential starts were 12% higher than the 12 months ending April 2020, with single-family rising 20% and multifamily starts down 8%. On a year-to-date basis, total residential starts were 24% higher, with single-family leaping 31% and multifamily up 6%.

Construction Starts Chart April 2021bConversely, total nonbuilding starts came in 9% lower than the 12 months ending April 2020.

  • environmental public works starts were up 14%
  • highway and bridge starts were up just 1%
  • utility and gas plant starts were down 34%
  • miscellaneous nonbuilding starts were down 15%

Some ground was regained in the first four months of 2021, with total nonbuilding starts rising 6% on a year-to-date basis compared to the first four months of 2020.

  • environmental public works were 37% higher
  • miscellaneous nonbuilding starts were up 25%
  • utility and gas plant starts were 3% higher
  • highway and bridge starts dipped 11%

For the 12 months ending April 2021, nonresidential building starts fell 26% below the 12 months ending April 2020.

  • commercial starts dropped 27%
  • institutional starts were 18% lower
  • manufacturing starts fell a whopping 53%

Year to date, nonresidential building starts were 17% lower than for the first four months of 2020. Commercial starts fell 20%, institutional starts dropped 18% and manufacturing starts were up 13%.

Information provided by Dodge Data & Analytics and edited by Becky Schultz.

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