Dodge Economist: "Construction Starts Have Plateaued"

Total construction starts rose 17% in July, kicking off Q3 with a seasonally adjusted rate of $1.2 trillion, according to the Dodge Construction Network.

Nonbuilding starts drove the increase, rising 38% on the back of the $12 billion first phase of the Rio Grande LNG facility in Brownsville, Texas. Comparatively, residential starts were up 20%, and nonresidential lost 6%.

“Construction starts have plateaued and are making little headway,” said Richard Branch, chief economist for Dodge Construction Network. 

While rising to a seasonally adjusted rate of $1.2 trillion, he said, the average monthly level over the last 12 months has been $1.1 trillion.

“The question would be is the glass half full or is the glass half empty?” said Branch. “Your perception of the market depends on which markets you are playing into.”

Year-to-date through July 2023, total construction starts were 7% below that of 2022. Residential and nonresidential starts were down 21% and 7%, respectively; however, nonbuilding starts were up 20% on a year-to-date basis. 

On a year-over-year rolling sum analysis ending July 2023, total construction starts were 3% higher than that of 2022. Nonbuilding starts were 21% higher, and nonresidential building starts gained 16%. Conversely, on a 12-month rolling basis, residential starts posted a 17% decline overall.