If it seems houses and buildings are sprouting out of the ground in record time, it’s because they probably are. New construction starts increased 11 percent in March from February to a seasonally adjusted annual rate of $785.2 billion, according to Dodge Data & Analytics. The impressive growth spurt reverses mild declines in January (down 2 percent) and February (down 3 percent) and ramps up total construction starts to the highest level recorded over the past six months, the company reported.
Residential construction remained stable for single-family homes on a month over month basis. However, multifamily housing pulled down the overall construction for residences 2 percent in March. For the full year though, residential construction grew 7 percent with single-family housing increasing 4 percent and multifamily housing rising 12 percent from the same period last year.
Total construction starts for the first quarter (January to March 2018) on an unadjusted basis totaled $167.3 billion, a 7 percent drop from 2017. Measured on a 12-month moving basis, total construction starts for the 12 months ending this past March were up 1 percent compared with the 12-month period ending in March 2017.
When it comes to the Dodge Index, the March numbers resulted in a 166 reading (2,000 = 100), up from 150 in February. Throughout Q1 2018, the index averaged 157, up 2 percent from the 154 average inked in Q4 2017 but a trifle below the 161 average for full-year 2017.
“This type of data roller-coaster often occurs when construction reaches a mature stage of expansion, trailed by a slower growth rate,” said Robert A. Murray, Chief Economist for Dodge Data & Analytics.
"Looking at the data on a quarterly basis can reduce the volatility present in the monthly statistics,” he said. “This year's first quarter shows a continuation of the up-and-down pattern that’s been present over the past year—first quarter 2017 up 10 percent, second quarter 2017 down 6 percent, third quarter 2017 up 8 percent, fourth quarter 2017 down 9 percent, and now first-quarter 2018 up 2 percent.”
Slowing expansion doesn’t necessarily make for an imminent decline, and several factors will help construction stick close to recent levels, he notes, including a host of upcoming public works programs, a healthy economy, and moderately rising interest rates.