The value of new construction starts fell 13% in January to a seasonally adjusted annual rate of $485 billion, according to new figures released by industry data provider McGraw Hill Construction.
The downturn followed a healthy performance in December, which was the third highest month for total construction starts during 2013. January's retreat encompassed all three main construction sectors, with moderate declines reported for nonresidential building and housing, as well as a more substantial loss of momentum for non-building construction (public works and electric utilities) after a particularly robust December.
On an unadjusted basis, total construction starts in January came in at $34.1 billion, down 5% from the same month a year ago.
"The year 2014 began slowly, due to behavior specific to each of the three main construction sectors," said Robert A. Murray, chief economist for McGraw Hill Construction. "Nonresidential building in 2013 advanced 7%, but the progress was occasionally hesitant, including sluggish activity at the end of last year that carried over into January. Residential building in 2013 climbed 24%, but towards the end of last year growth began to decelerate as mortgage lending to first-time homebuyers remained stringent. The January slowdown for housing was due in part to tough winter weather conditions, yet the deceleration in recent months bears watching going forward.”
Nonresidential building in January dropped 6% to a $157.3 billion annual rate and was down 7% from last year's average monthly pace, while institutional building sector in January decreased 12%, as the recent signs of stability after a lengthy five-year decline continue to be tenuous.
Residential building, at $a 204.7 billion annual rate, slipped 2% in January. The retreat came as the result of a 6% decline for single family housing, which has now settled back for three months in a row.
Non-building construction in January plunged 32% to a $123 billion annual rate, following its 40% surge in December.
By geography, total construction starts for January 2014 compared to a year ago show declines in four of the five major regions: the West, down 15%; South Atlantic, down 9%; South Central, down 5%; and the Midwest, down 3%. The Northeast was the only region to register a year-over-year gain for January 2014, advancing 15%.