Non-residential, multi-family housing starts retreat after March gains

New construction starts declined eight percent in April after experiencing gains in March.  Photo © Bigstock.com/sopotniccy
New construction starts declined eight percent in April after experiencing gains in March.
Photo © Bigstock.com/sopotniccy

In a Dodge Data and Analytics report, the value of new construction starts declined eight percent to a seasonally adjusted annual rate (SAAR) of $608.3 billion last month following major advances in March.

Both the non-residential and multi-family housing industries experienced slower paces; however, non-building construction saw improvement with public works strengthening after a weaker March performance. April’s data lowered the Dodge Momentum Index to 129 from 140 in the previous month.

“The construction start statistics on a month-to-month basis are subject to frequent ups and downs, so April’s decline after two months of improved activity was not a surprise,” said Robert Murray, Dodge’s chief economist. “The elevated volume for non-residential building in March was not expected to be sustained in the near term, yet the strength shown by its institutional segment does provide an indication of where growth is likely to come over the course of 2016.”

“The prospects for the commercial segment of non-residential building, while still positive, have grown more tenuous given signs that banks are beginning to take a more cautious approach towards commercial real estate loans,” he continued. “Residential building is still deriving some benefit from this year’s low interest rate environment and increased funding under the new federal transportation act should provide support for the public works sector.”

Some April statistics from the report include:

  • non-residential building dropped 19 percent to $185.1 billion after it jumped 26 percent in March;
  • institutional sector fell 24 percent after surging 50 percent in March;
  • commercial building fell 18 percent;
  • healthcare facilities dropped 10 percent; and
  • hotel construction declined 49 percent.

However, not all sectors decreased—warehouses, office buildings, and manufacturing plants experienced gains.

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