May construction starts fell 1% amid high materials prices, labor shortages

June 17, 2021

Dodge Data & Analytics, New York, has reported construction starts fell 1% in May as higher materials prices, supply shortages and labor shortages continue to affect the industry.

“The weight of higher material prices and a lack of skilled labor are having a direct and notable influence on residential construction activity,” said Richard Branch, chief economist for Dodge Data & Analytics. “These negative factors are expected to continue to impact the sector over the remainder of the year and will result in a less positive influence from housing on overall levels of construction activity. While feeling similar effects, the nonresidential sector continues its modest recovery off the lows of last summer. There are enough projects in the planning pipeline to suggest this trend should continue into next year, but higher material prices will result in longer lead times to groundbreaking and more temperate improvements in nonresidential starts.”

Nonresidential building construction rose 10% in May. Commercial construction starts increased 6% with losses only in the office category, and institutional starts fell 2% despite gains in the health care category.

Residential building construction fell 10% in May. Single-family housing dropped 12%, and multifamily construction declined 7%.

Nonbuilding construction rose 5% in May.

For the 12 months ending May, nonresidential building was down 19% compared with the 12 months ending May 2020. Residential building rose 18%, and nonbuilding construction fell 5%.

Tags: Business | Residential | Commercial | Trends

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