The construction sector seems to have returned its momentum from the first quarter to the second quarter of 2022, according to Dodge Data & Analytics. The company’s latest research study of total U.S. housing starts in April showed an overall rise of 3%, to a seasonally-adjusted annual rate of $945.8 billion, after a drop in March.
According to the report, non-residential housing starts in April increased by 6% and residential housing starts also increased by 4%. However, the non-construction sector saw a 4% drop in the number of housing starts.
Looking at year-to-date numbers, total housing starts are up 6% from the same period in 2021. Looking at a 12-month period ending April 2022, total housing starts also increased, 12% more than the 12 months ending in April 2021.
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Richard Branch, Chief Economist for Dodge Building Network, said in prepared remarks that the construction industry does not appear to fear higher interest rates and a potential recession. He added that most sectors are already heading for recovery as underlying economic growth and hiring are strong.
Start of construction of non-residential and residential buildings
Non-residential building starts rose 6% in April to a seasonally adjusted annual rate of $295.9 billion, according to Dodge. Commercial projects saw 2% more starts, the institutional sector saw 8% more starts, while the manufacturing sector saw a 16% increase in starts.
Manufacturing starts are more significant when looking at year-to-date numbers as they have seen an increase of 189%, compared to the 11% jump from commercial and the 1 % of institutional housing starts. Similarly, manufacturing starts on a 12-month moving sum basis jumped 163%, while the 19% increase in commercial starts and the 11% rise in institutional starts looked lean. in comparison.
Dodge noted that the largest non-residential construction projects to start in April were the $500 million Caesars Virginia hotel and casino in Danville, Va., the $430 million Aggie Square life sciences building in Sacramento, Calif., and the $400 million Rose Gaming Resort. in Dumfries, Virginia.
As for residential projects entering planning, there was a 4% jump in housing starts in April to a seasonally adjusted annual rate of $462.9 billion. Single-family housing starts rose 1%, while multi-family homes saw a 13% increase. Year-to-date, multi-family housing starts are up 16%, while single-family housing has fallen 2%. On a 12-month moving sum basis, single-family housing starts were 6% higher and multi-family housing starts were 27% higher.
The report noted that the largest residential projects to start in April were the $420 million apartments at 2-10 54th Ave. in Long Island City, NY, the $400 million Civic Square condominiums in Seattle and a $300 million mixed-use building that is also in Long Island City.
Housing starts excluding construction and coming months
In April, non-housing construction was the only category to drop 4% in housing starts, to a seasonally adjusted annual rate of $187.1 billion. The Environmental Public Works category increased 8% and Utilities/Gas Works starts increased 10%. The sector as a whole was held back in April by highway and bridge projects down 14%, with miscellaneous housing starts down 2%.
Branch said in prepared remarks that the recovery momentum is expected to continue in the coming months due to the expansion of the pipeline of projects being planned. He also noted in prepared remarks the Federal Reserve’s fear of forcing the United States into recession later this year, which could disrupt the momentum in housing starts.
Regionally, total housing starts increased in the Northeast, South Atlantic and South Central regions, but fell in the Midwest and West.