At a seasonally adjusted annual rate of $651.2 billion, new construction starts in May increased a slight 1% from April, according to Dodge Data & Analytics, New York.
Public works construction bounced back 30% from its subdued April amount, helped by the May start of four large pipeline projects totaling a combined $3.0 billion. This enabled the non-building construction sector (which also includes electric utilities and gas plants) to register a 23% gain in May, offsetting modest 4% declines for both nonresidential building and housing. Through the first five months of 2017, total construction starts on an unadjusted basis were $274.3 billion, down 5% from the same period a year ago. If the volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts during the first five months of 2017 would be up 2% relative to last year.
Residential building was $284.9 billion (annual rate) in May, down 4%. Multifamily housing retreated 10% following increases over the previous two months that saw activity rise 20%. There were seven multifamily projects valued at $100 million or more that reached groundbreaking in May, led by a $450 million multifamily high-rise in lower Manhattan NY, the $200 million multifamily portion of a $240 million multifamily/hotel mixed-use high-rise in Chicago IL, and a $200 million multifamily high-rise in Boston MA. In May, the top five metropolitan areas in terms of the dollar amount of multifamily starts were the following – New York NY, Los Angeles CA, Philadelphia PA, Chicago IL, and Boston MA. Through the first five months of 2017, the top five metropolitan areas were the following – New York NY, Los Angeles CA, Chicago IL, Washington DC, and San Francisco CA. The New York NY share of the national multifamily total so far in 2017 is 18%, up slightly from the 17% share reported for full year 2016, although down from the 25% share reported for full year 2015.
Single-family housing settled back 2% in May, with its upward track pausing for the third month in a row after showing steady growth during the fourth quarter of 2016 and the first two months of 2017. By major region, single-family housing in May revealed this performance – the West, down 7%; the Midwest, down 5%; the South Atlantic, up 1%; the South Central, up 2%; and the Northeast, up 4%. One plus for single-family housing going forward is the recent retreat in the cost of financing, with the 30-year fixed mortgage rate slipping to 3.9% in early June, after reaching 4.3% in late 2016.
