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Construction Starts Drop 3% in April

0 171 Market Intelligence

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through April 2009, excluding residential contracts, totaled $75.7 billion, 3.4% less than in the same period in 2008. Starts fell 8% from March and were 38% below last December, reports Reed Construction Data chief economist Jim Haughey.

Reed Construction Data (RCD) announced today that the year-to-date value of construction starts through April 2009, excluding residential contracts, totaled $75.7 billion, 3.4% less than in the same period in 2008. Starts fell 8% from March and were 38% below last December. The volume decline is greater than 38% because bid prices have inched lower and April is typically a seasonally stronger month than December.

The value of construction starts each month is summarized from RCD’s database of all active construction projects in the United States, excluding single-family homes. Missing project values are estimated using RSMeans’ building cost models.

Institutional building (-47%) and commercial building (-45%) starts plunged since December from record-high levels, while heavy project starts fell only 16%. Normally, institutional and heavy construction would face many more months of continuing steep declines in starts, but the economic stimulus plan will cushion much of the usual late cycle recession impact in both of these markets.

Value of United States Construction Starts — April 2009
(Reed Construction Data)

  Jan-Apr
2009
(millions)
% Change
(Jan-Apr 09 vs
Jan-Apr 08)
  Jan-Apr
2009
(millions)
% Change
(Jan-Apr 09 vs
Jan-Apr 08)
Hotel/Motel $1,732 -60.50%   Government Office $1,239 -24.20%
Retail $5,911 -21.00%   Laboratory $1,234 -13.50%
Parking Garage $408 -57.60%   Warehouse $889 29.00%
Amusement $1,289 -12.90%   Misc. Commercial $3,067 184.00%
Private Office $4,833 -35.60%  
COMMERCIAL $20,602 -22.70%

INDUSTRIAL (Manufacturing) $1,071 -12.40%

Religious $755 -17.10%   Police/Courthouse/Prison $1,586 -18.10%
Hospital/Clinic $5,851 -2.00%   Military $891 -49.40%
Nursing/Assisted Living $1,042 27.40%   School/College $13,877 -9.00%
Library/Museum $1,288 12.30%   Misc. Government $1,823 63.50%
INSTITUTIONAL $27,113 -6.20%  

Misc. Non-residential $787 41.90%
NON-RESIDENTIAL BUILDING $49,573 -13.50%

Airport $1,047 529.80%   Dam/Marine $484 55.20%
Road/Highway $9,811 -0.70%   Water/Sewage $6,119 10.90%
Bridge $3,646 61.80%   Misc. Civil $4,998 75.50%
HEAVY ENGINEERING $26,105 24.50%

TOTAL NON-RESIDENTIAL $75,678 -3.40%

Source: Reed Construction Data (RCD) and Property & Portfolio Research (PPR) (www.ppr.info).
Table: Reed Construction Data – CanaData.

The slowdown in starts has not yet appeared in the Census Bureau’s monthly (through March) estimates of job-site construction spending for institutional and heavy construction. Construction spending has not declined from a year ago, but it will during the spring, before the full impact of stimulus spending hits.

Construction spending for commercial buildings is now 13% below a year ago. Reed Construction Data expects the peak-to-trough decline in construction spending to be 20% for commercial buildings, 12% for heavy construction and 8% for institutional buildings.

The starts data through April now includes the following: (1) the impact of the September 2008 credit freeze; (2) most, but not all, of the impact of the deeper recession that it set off; but (3) little, if any, of the impact of the $787 billion additional federal spending approved in mid-February.

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by Jim Haughey last update:Jul 17, 2009

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