Written by Ben Johnson on February 2, 2019
For 2018 as a whole, total construction starts increased a slight 0.3% to $789.0 billion. This came after 7% gains in both 2016 and 2017, as well as 11% to 14% gains from 2012 through 2015. The 2018 increase for total construction starts was restrained by a 31% plunge for the electric utility/gas plant category. If electric utilities and gas plants are excluded, total construction starts for 2018 would be up 2% from 2017.
鈥淭he monthly pattern of construction starts was mixed during 2018, as elevated activity in June and October was offset by weaker activity in the months immediately following, with the end result being that the 2018 dollar amount of construction starts was slightly above the previous year,鈥� stated Robert A. Murray, chief economist for 糖心Vlog Data & Analytics. 鈥淏y recent standards, the overall level of construction starts in 2018 can be regarded as healthy, but the substantially slower rate of growth compared to the prior six years is suggestive of a market that鈥檚 close to a peak.鈥�
鈥淭here were several noteworthy features that stand out in the 2018 construction starts data,鈥� Murray continued. 鈥淟ast year鈥檚 brisk economic expansion enabled market fundamentals for multifamily housing and commercial building to strengthen, which supported more growth for apartment projects, office buildings, and hotels. However, store construction continued to decline, adversely affected by the glut of retail space produced in the previous decade as well as by the greater role now played by e-commerce. Single family housing showed improvement early in 2018, but then plateaued and began to recede given affordability constraints. The institutional building segment showed more growth for educational facilities and witnessed a number of major transportation terminals reach groundbreaking, although not to the same extent as what took place in 2017. Public works construction benefitted from the 2018 omnibus federal appropriations bill passed last March, as well as funding arising from recent state transportation bond measures. Going forward into 2019, economic growth is not expected to be as strong as what occurred during 2018, which may dampen groundbreaking for multifamily housing and commercial building projects. In addition, more growth for public works this year requires that federal appropriations for fiscal 2019 get finalized without much further delay.鈥�
Read the full press release here.