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The value of new construction starts in October soared 21% at a seasonally adjusted annual rate, following "three straight months of decline," construction data provider Dodge Data & Analytics reported on November 20. "Nonresidential building in October surged 53%, as several very large projects lifted the manufacturing plant, office building and transportation terminal categories.Nonbuilding construction in October advanced 14%, supported by growth for public works, while the electric utility/gas plant category bounced back from depressed activity in September. Residential building in October edged up a slight 2%, helped by improvement for multifamily housing. During the first 10 months of 2018, total construction starts on an unadjusted basis were...up 1% from the same period a year ago. The year-to-date [YTD] gain for total construction starts was restrained by a 45% slide for the electric utility/gas plant category. If [that] category is excluded, total construction starts during the first ten months of 2018 would be up 3% relative to the same period a year ago.
Airport construction spending is among the fastest-growing categories in 2018. Combined private and state and local air transportation construction spending jumped 38% from September 2017 to September 2018, Census Bureau data released on November 1 show. Among the largest October starts cited by Dodge were "the $1.4 billion Terminal One building at Newark Liberty International Airport...and a $655 million concourse expansion at Denver International Airport that's part of that facility's extensive upgrade. "Capital spending at U.S. airports grew by 24% to $12.7 billion in 2017 from the previous year, according to Federal Aviation Administration data, the biggest increase since at least 2010," the Wall Street Journal reported on November 15. "At least $70 billion in renovations is planned at medium and large U.S. airports over the next five years, according to the Airport Consultants Council, [which reports] much of that money is going toward terminal renovations, expansions and other big-ticket construction projects. Other projects include new gates [and] shopping and dining amenities."
Lodging construction continues to increase. Consultancy Lodging Econometrics (LE) reportedon November 8 that "in the third quarter of 2018 the total U.S. construction pipeline stands at 5,376 projects/650,576 rooms, up 7% from 2017...The total pipeline has been growing modestly over the past two years and is expected to continue its ascent at least into the first quarter of 2019....Projects in the early planning stage with 1,594 projects/84,031 rooms are up significantly, 31% by projects and 23% by rooms year-over-year [y/y]. Big jumps are typical for the back-end of a hotel real estate cycle when developers rush to move projects from the drawing board to the pipeline before further interest rate hikes, the rising cost of building materials and the continued struggle to secure skilled labor take effect. Projects scheduled to start construction in the next 12 months, with 2,144 projects/253,102 rooms, are near even y/y. Projects currently under construction are at 1,638 projects/213,443 rooms, while the highest count for this cycle, they are up only modestly y/y. The announced renovation and conversion pipeline has expanded significantly with the total pipeline at 1,767 projects/273,443 rooms, it is the largest count that LE has ever recorded. These numbers show a remarkable 30% increase by projects and 27% increase by rooms, y/y." Lodging construction spending in the first nine months of 2018 was up 11% from the same period in 2017, Census data released on November 1 show.
Housing starts increased 1.5% from September to October but decreased 2.9% y/y, the Census Bureau reported on November 20. The YTD total for January-October combined, not seasonally adjusted, was 5.6% higher than a year ago. Single-family starts slipped 1.8% for the month and 2.6% y/y but rose 5.5% YTD. Multifamily starts—an often volatile indicator—climbed 6.2% for the month and 5.9% YTD but declined 4.5% y/y. Building permits dipped 0.6%, seasonally adjusted, from September to October and 6.0% y/y but rose 3.9% YTD. Single-family permits declined 0.6% for the month and y/y but increased 5.7% YTD. Multifamily permits were unchanged for the month but slumped 17% y/y and 0.2% YTD.
"Construction costs increased again in November," consultancy IHS Markit and the Procurement Executives Group (PEG) reported on November 21. November was the 23rd month in a row with higher costs. "Materials and equipment prices rose once again in November, though at a slower rate than October...Price increases for materials and equipment were recorded in 11 of the 12 subcomponents in November; only turbines had flat pricing. Compared to last month, copper-based wire and cable, heat exchangers and pumps had large gains. All other categories...lost some of their pricing power....Current subcontractor labor prices increased at a slightly quicker pace this month."
Distributor New South Construction Supply reported on November 21 in its monthly e-newsletter, "Multiple manufacturers of construction products we distribute either announced price increases or increased prices in November. Most cited transportation availability shortages and resulting freight rate hikes as the main culprit, as well as increased raw material costs. A few manufacturers dealing in asphaltic-based products also cited the lack of availability of asphalt as a reason." In contrast, "domestic rebar prices remained stable through November....Concrete reinforcing wire mesh priceshave been stable over the past few months, with November pricing staying flat after the double-digit increases seen three to six months ago. Availability has improved but, depending on the gauge and size of both sheets and rolls, lead times are still longer than they have historically has been....The lack of drivers and increased transportation costs are still playing a role with the increased lead times." Readers are invited to submit information on price changes to firstname.lastname@example.org.