Construction starts continue to slump, Dodge Data & Analytics reports

U.S. construction starts declined in August for the third straight month, pushing starts to an 11-month low, according to a report from Dodge Data & Analytics.

“Construction starts have hit a rough patch following the euphoria seen in the early stages of recovery from the pandemic,” said Richard Branch, chief economist for Dodge Data & Analytics.

Total starts fell 9% in August, when compared with the previous month, to a seasonally adjusted annual rate of $782.8 billion, the Hamilton-based analytics firm said. Concerns surrounding the Delta variant and cost increases pushed starts lower in all three sectors: nonbuilding, residential and nonresidential.

“The Delta variant has raised concern that the fledgling economic recovery is stalling out, undermining the already low level of demand for most types of nonresidential buildings,” Branch said. “Additionally, significant price increases for construction materials, logistic constraints and labor shortages are making a challenging situation worse.”

Although starts likely will remain unsteady through the end of 2021, total starts are up 11% year-to-date, and there are indications that the stall will be short lived, Branch said.

“The dollar value of projects entering planning continues to suggest that the recovery in construction starts should resume early in the new year,” he said.