Multifamily housing construction slips in April
The value of new construction in April dropped 13 percent from the previous month to a seasonally adjusted annual rate of $647.8 billion, according to Dodge Data & Analytics.
The decline follows three straight months of gains, which saw total construction activity increasing 20 percent from back in December.
April’s total construction reflected a 39 percent drop by its nonbuilding construction sector, which had been lifted in March by the start of two large pipeline projects — the $4.2 billion Rover natural gas pipeline in Ohio and Michigan, and the $2.5 billion Mariner East 2 propane and natural gas liquids pipeline in Pennsylvania.
The residential building sector slipped a more moderate 5 percent in April, and nonresidential building receded only a slight 1 percent drop. During the first four months of 2017, total construction starts on an unadjusted basis were $213.9 billion, down 4 percent from last year’s January–April period. If the volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts during the first four months of 2017 would be up 4 percent compared to last year.
“The construction start pattern so far in 2017 can be characterized as three steps forward and one step back, as the often hesitant pattern of the construction expansion continues,” stated Robert A. Murray, chief economist for Dodge Data & Analytics.
“The first three months of this year drew support from a number of very large projects, most notably several massive pipeline and airport terminal projects,” Murray continued. “While April did include groundbreaking for the $1.3 billion Oceanwide Center mixed-use complex in San Francisco, comprised of two high-rise towers, the boost from very large projects in April was generally less than what occurred during the first three months of this year. In addition, both residential building and public works had been trending upward through March, but then experienced a pause in April. In contrast, nonresidential building in April was able to remain essentially stable. On the plus side for construction, Congress in early May passed a continuing resolution for fiscal 2017 appropriations that includes a small increase for highway spending, bringing it up to levels called for by the FAST Act — the multiyear federal transportation legislation. And, long-term interest rates have steadied for the time being, following the increases that were reported in late 2016 and early 2017.”
Nonbuilding construction was $119.0 billion (annual rate) in April, down 39 percent from its heightened March amount. Nonbuilding construction had registered steady growth during the first three months of 2017, with March activity up 16 percent from nonbuilding’s average pace during 2016. The public works categories as a group plunged 48 percent in April, with much of the decline coming from an 83 percent slide for the miscellaneous public works category, which includes such diverse project types as pipelines, mass transit, outdoor sports stadiums, and site work.
Residential building, at $295.4 billion (annual rate), settled back 5 percent in April. Single-family housing slipped 6 percent in April, retreating for the second month in a row after showing modest improvement during the fourth quarter of 2016 and the first two months of 2017. April’s pace for single-family housing was still 5 percent above the average monthly pace during 2016. By geography, single-family housing in April recorded the following performance relative to March — the South Atlantic, down 11 percent; the West, down 5 percent; the Midwest, down 4 percent; the South Central, down 3 percent; and the Northeast, up 2 percent. Multifamily housing in April receded 3 percent from March. There were seven multifamily projects valued at $100 million or more that reached groundbreaking in April, led by the $387 million multifamily portion of San Francisco’s Oceanwide Center, the $349 million multifamily portion of the $500 million One Beverly Hills mixed-use complex in Beverly Hills, Calif., and the $280 million One South Halstead apartment tower in Chicago. In April, the top five metropolitan areas in terms of the dollar amount of multifamily starts were the following, in order: San Francisco, Los Angeles, New York, Chicago, and Washington, D.C. Through the first four months of 2017, the top five metropolitan areas were the same, although with this order: New York, Los Angeles, Chicago, Washington, D.C., and San Francisco.
Nonresidential building in April was $233.4 billion (annual rate), down 1 percent from March. The commercial building categories as a group were up 6 percent in April, led by a 24 percent increase for office buildings. There were five office building projects valued at $100 million or more that reached groundbreaking in April, led by the $780 million office portion of San Francisco’s Oceanwide Center, the $321 million office portion of a $420 million office and retail high-rise in Charlotte, N.C., and a $300 million Facebook data center in Fort Worth. The commercial garage category rose 14 percent in April, lifted by $99 million for the garage portion of Charlotte’s $420 million office and retail high-rise, while hotel construction rose 5 percent, with the lift coming from $106 million for the hotel portion of Beverly Hills’ One Beverly Hills mixed-used complex, $98 million for a convention center hotel in Irving, Texas, and $95 million for the hotel portion of San Francisco’s Oceanwide Center. On the negative side, both stores and warehouses retreated in April, falling 7 percent and 20 percent, respectively. The manufacturing plant category in April jumped 147 percent after its weak March amount, helped by the start of a $240 million livestock processing facility in Iowa and a $200 million wood processing facility in Michigan.