The value of new construction starts in September soared 14% from the previous month to a seasonally adjusted annual rate of $814.8 billion, Dodge Data & Analytics said Thursday.
The nonresidential building sector strengthened for the second month in a row, climbing 37% with the boost coming from the start of a $6.0 billion ethane cracker plant in western Pennsylvania plus two projects in New York NY – the $4.0 billion Delta Airlines new terminal facility at LaGuardia Airport and the $1.7 billion 50 Hudson Yards office tower in Manhattan.
Residential building in September edged up 1%, as both single family and multifamily housing registered modest gains. Running counter in September was a 3% drop for non-building construction, with decreased activity for its public works segment.
Through the first nine months of 2017, total construction starts on an unadjusted basis were $557.7 billion, essentially matching the corresponding amount from a year ago. The year-to-date dollar volume for total construction was dampened by a 38% decline for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first nine months of 2017 would be up 3% compared to the same period last year.
September's data produced a reading of 172 for the Dodge Index (2000=100), up from 151 in August, and the highest level so far in 2017.
"The pattern of construction starts on a monthly basis has occasionally been subject to 'spikes', due to the presence of unusually large projects in a given month, and September certainly qualifies as one of those monthly 'spikes'," said Robert A. Murray, chief economist for Dodge Data & Analytics. "Looking at the data on quarterly basis helps to ease the volatility present in the monthly statistics, and it shows the third quarter rebounding 8% after a 9% decline in the second quarter, returning the level of activity to within 2% of the strong pace achieved during the first three months of this year. As the current expansion for construction has matured, there's been more of an up-and-down pattern on a quarterly basis, including what's been reported so far during 2017. What does stand out about the construction industry in 2017 is the strength shown by non-residential building, led by such institutional project types as transportation terminals and educational facilities. On the commercial side, office buildings and warehouses continue to see growth, although hotel construction appears to have peaked and store construction has generally weakened. And, with this year's pickup in petrochemical plant starts, following a steep two-year decline, the manufacturing building category is no longer exerting a downward pull on the non-residential building total."
Residential building improved a slight 1% in September to $298.9 billion (annual rate), with modest increases for single family housing, up 1%; and multifamily housing, up 2%. Single family housing appeared to lose momentum in late spring, but now seems to be stabilizing with gains in August and September. By geography, single family housing showed growth in four of the five major regions in September – the Midwest, up 5%; the Northeast, up 4%; the West and South Central, each up 2%. The South Atlantic was the one major region to register a September decline, sliding 4%.
Multifamily housing has shown an up-and-down pattern so far during 2017, as its 2% increase in September followed an 8% drop in August. There were seven multifamily projects valued at $100 million or more that reached groundbreaking in September, led by the $235 million multifamily portion of a $290 million mixed-use building in New York NY, a $200 million multifamily high-rise in San Diego CA, and a $189 million multifamily high-rise in Jersey City NJ.
