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May Construction Starts Increase 3 Percent

Residential Building Shows Modest Improvement In May; Highway And Bridge Construction Slips 1 Percent.

By Mark S. Kuhar


At a seasonally adjusted annual rate of $729.7 billion, new construction starts in May climbed 3 percent compared to April’s already elevated pace, according to Dodge Data & Analytics. The nonbuilding construction sector provided much of the lift, given an exceptionally strong amount reported for the electric power and gas plant category, which reflected a massive liquefied natural gas (LNG) export terminal project in Texas being entered as a May start.

Residential building showed modest improvement in May, helped by more multifamily housing, while nonresidential building fell sharply from its heightened April volume. Highway and bridge construction slipped 1 percent.

“The presence of unusually large projects, notably several LNG terminals and several petrochemical plants, continues to lift the volume of total construction starts above its underlying trend,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “This lift from unusually large projects is expected to become less pronounced as 2015 proceeds, which still leaves total construction starts growing at about a 10 percent clip.

Nonresidential building is witnessing a broader expansion this year, with its institutional building segment contributing to the upturn along with the strengthening trend already established for commercial building. Residential building is seeing further growth for multifamily housing although any upward movement by single-family housing remains hesitant. The public works sector has proven to be surprisingly resilient so far in 2015, as states and localities have picked up some of the slack from essentially flat federal funding. On a cautionary note, public works still faces near term uncertainty, since the recently expired federal transportation legislation was extended by Congress only through the end of July, and the Highway Trust Fund will need to be shored up once again with additional funding.”

Nonbuilding Construction 

Nonbuilding construction in May jumped 59 percent to $262.7 billion (annual rate). The electric power and gas plant category led the way, soaring 229 percent, which was due in large measure to the massive $9 billion LNG export terminal in Corpus Christi, Texas, being included as a May start.

The huge increase for the electric power and gas plant category in May also reflected the start of several very large power plants, including two solar power facilities in California, valued at $1.0 billion and $582 million, respectively, as well as a $600 million natural gas-fired power plant in Indiana.

The public works categories as a group receded 3 percent in May. Highway and bridge construction slipped 1 percent, although May did include the start of two major bridge projects – a $158 million bridge replacement in Indiana and a $146 million bridge upgrade in New Jersey.

 Monthly Construction Starts (Seasonally Adjusted Annual Rates, In Millions of Dollars) May 2015

April 2015 

% Change
Nonresidential Building $208,143 $287,805 -28
Residential Building $258,866 $253,033 +2
Nonbuilding Construction $262,689 $165,115 +59
TOTAL Construction $729,698 $705,953 +3

The miscellaneous public works category, which includes such diverse project types as rail-related work and pipelines, fell 38 percent in May. The previous month had included $690 million for the start of rail-related work in the Fresno, Calif., area as part of the California high-speed rail project, and by contrast the largest miscellaneous public works construction start in May was a $67 million natural gas pipeline in Pennsylvania.

The environmental public works categories all showed strong percentage gains in May. Water supply construction advanced 28 percent, aided by the start of an $84 million water treatment plant in Alabama, while river/harbor development and sewer construction showed gains of 26 percent and 23 percent, respectively.

Residential Building

Residential building, at $258.9 billion (annual rate), edged up 2 percent in May. Multifamily housing improved 7 percent, regaining upward momentum after settling back during the previous two months. May featured the start of eight multifamily projects valued each in excess of $100 million, with the largest being a $392 million project located in Long Island City, N.Y.

Of these eight projects, four were located in the New York metropolitan area, with the other four located in San Jose, Calif., Los Angeles, Austin and Chicago.

Single-family housing in May was unchanged from its April pace, as its pattern of very slight increases followed by flat activity continues. On a regional basis, single-family housing in May showed a 3 percent decline in the West, no change in the South Atlantic, 2 percent improvement in the South Central and Midwest, and a 7 percent rebound in the Northeast.

Nonresidential Building

Nonresidential building in May fell 28 percent to $208.1 billion (annual rate), pulling back after surging 58 percent in April. The manufacturing building category in April had provided a sizeable boost, rising 513 percent as the result of an $8.1 billion petrochemical plant in Louisiana being entered as a construction start.

While May did include the start of a $208 million HVAC manufacturing plant in Texas, the manufacturing building category plunged 94 percent in May relative to its exceptional April amount. If the manufacturing building category is excluded, nonresidential building in April would have advanced a more modest 9 percent, followed by a 12 percent increase in May.

The commercial categories as a group increased 16 percent in May. Warehouse construction registered a substantial 95 percent hike, supported by the start of a $207 million warehouse in Texas and a $90 million warehouse in South Carolina. Hotel construction in May climbed 90 percent after a weak April, and featured groundbreaking for such projects as the $342 million Resorts World & Casino (initial phase) in Las Vegas and the $196 million Westin hotel tower in Philadelphia.

Store construction in May improved 7 percent, supported by the start of a $210 million shopping mall in Kapolei, Hawaii, and a $105 million shopping center in the Allentown, Pa., area.

Office construction in May retreated 30 percent following an April that included $1.0 billion for the office portion of a high-rise at the Hudson Yards development in New York. May did include the start of several large office interior renovation projects, such as $150 million for work at the 10 Hudson Yards building in New York and $60 million for work at the Fan Pier site in Boston.

The institutional building categories as a group increased 10 percent in May. Educational facilities, the largest nonresidential building category by dollar volume, grew 8 percent. Major educational facility projects that reached the construction start stage in May included a $140 million life science and engineering building at Boston University in Boston; a $90 million engineering building at the University of Maryland in College Park, Md.; an $88 million engineering building at Louisiana State University in Baton Rouge, La.; and $70 million for three building additions at Harvard University’s Kennedy School of Government in Cambridge, Mass.

The healthcare facilities category registered a strong 34 percent gain, aided by the start of the $750 million Memorial Sloan Kettering Cancer Center in New York and a $200 million hospital in Oxford, Miss. The public buildings category rose 33 percent, helped by the start of a $95 million courthouse expansion in Waukegan, Ill., and a $66 million detention facility in Bismarck, N.D.

On the negative side, the amusement category retreated 4 percent after a strong April, although May did include the start of the $149 million American Dream Water and Amusement Park in East Rutherford, N.J. Decreased activity was also reported for church construction, down 6 percent; and transportation terminal work, down 25 percent. The transportation terminal decline followed a strong April that featured several large projects, and May did include $400 million for the start of two terminal upgrades at Los Angeles International Airport.


During the first five months of 2015, total construction starts on an unadjusted basis were reported at $272.5 billion, up 25 percent from the same period a year ago. The current year has included the start of 12 massive projects valued each at $1 billion or greater, compared to five such projects during the corresponding period of 2014. If these projects valued at $1 billion or greater are excluded, total construction starts on an unadjusted basis would be up a more moderate 10 percent year-to-date.

Through the first five months of 2015, the top five states for highway and bridge construction were Florida, Texas, California, New York and Illinois. States ranked six through 10 for highway and bridge construction during this time were Pennsylvania, North Carolina, Ohio, New Jersey and Indiana.

Through the first five months of 2015, the top five metropolitan areas in terms of the dollar amount of multifamily starts were the following – New York, Miami, Washington, D.C., Boston and Seattle.

The 25 percent gain for total construction starts on an unadjusted basis for the first five months of 2015 was comprised of growth for all three major construction sectors.

  • Nonbuilding construction year-to-date climbed 70 percent, with electric utilities and gas plants, up 434 percent; and public works, up 11 percent.
  • Residential building year-to-date advanced 14 percent, with multifamily housing, up 24 percent; and single family housing, up 10 percent.
  • Nonresidential building year-to-date increased 8 percent, with manufacturing building, up 38 percent; institutional building, up 8 percent; and commercial building, down 3 percent.

By geography, total construction starts during the January-May period of 2015 showed this performance relative to last year – the South Central, up 77 percent; the Northeast, up 22 percent; the South Atlantic, up 14 percent; the Midwest, up 5 percent; and the West, up 2 percent.