December construction starts fall 23 percent from November


Reed Construction Data (RCD) announced that the year-to-date value of construction starts through December, excluding residential contracts, totaled $261.7 billion, 1.5% less than during the same months in 2009. Individual month of December starts were 23% below November, reversing a large starts increase in November from October.

Averaged together, November-December starts were higher than any month in 2010 except August. The average value of starts in the last two months was 15% higher than the average month in 2010, about 25% higher adjusting for the usual seasonal weakness at the end of the year. The year-end upturn in starts is consistent with three consecutive monthly gains in job-site construction spending through November.

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.

The annual change in starts in 2010 was +1.1% for heavy construction, -12.9% for manufacturing, -7.8% for commercial buildings and -0.3% for institutional buildings. The annual change for all non-residential construction was -1.5%. Preliminary estimates show a 5.8% 2010 increase for single-family construction and a 17.7% rise for multi-family construction.

Contractors started 43 projects in December valued at $50 million or more each. As small as this count is, it is larger than many months in the last year. Starts trends are expected to change in 2011. The pipeline of funding appropriated for heavy and institutional projects before the recession or included in stimulus programs is being used up and the pace of new funding is ebbing. By contrast, lending approval for commercial projects will improve significantly. This has already begun for apartments. Read More