Dive Brief:
- The value of construction starts between May and June fell 7% to a seasonally adjusted annual rate of $595.1 billion, Dodge Data & Analytics reported Thursday.
- With a lack of high-dollar projects similar to those in May, nonbuilding dove 24% to an annualized $145.7 billion, and a slight slowdown in multifamily and single-family starts edged residential down 2% to $268.6 billion. Nonresidential, however, grew 6% to $180.8 billion after two straight months of declines thanks to hotels and office building starts.
- Total construction starts for the first half of 2016, January through June, fell 11%, as did year-to-date starts for nonbuilding (-22%) and nonresidential (-19%). Residential boasted the only positive January-to-June start activity with an increase of 4%.
Dive Insight:
The fall in June starts pushed the Dodge Index from its May reading of 135 to 126. Dodge Data & Analytics Chief Economist Robert A. Murray said the month-over-month volatility can be largely attributed to the level of sporadic, very large projects. However, Murray added that lower long-term interest rates, plentiful commercial development financing, the increased use of construction bond financing and the multiyear federal transportation bill are positive signs for future activity.
On the residential side, this week the Commerce Department reported that housing starts were up 4.8% in June to an annualized rate of 1.19 million units from May's 1.14 million units. Housing starts were also down 2% year over year. In addition, the agency reported a 1.5% month-over-month uptick in building permit applications, but permit activity fell 13.6% from June 2015.
June's regional housing starts were on the upswing for the Northeast (46.3%) and West (17.4%) but fell 3.4% in the South and 5.2% in the Midwest. The number of permits issued increased by 9.4% in the Northeast and by 8.3% in the South, while permit activity in the Midwest (-2.8%) and West fell (-10.1%).
