Pandemic Relief Spending Helps Spur 26% Jump In Nonresidential Construction Starts

U.S. construction rode a particularly active first two months of the year to a 26% year-over-year increase in nonresidential construction starts for the first quarter of 2022.

For the first three months of the year, total construction starts were 9% higher than the same period in 2021, according to Dodge Construction Network. Residential starts also gained, but by a more modest 3%.

For the 12 months ending March 2022, total construction starts were up 15% compared with the 12 months ending March 2021. Nonresidential starts surged 25%, while residential starts gained 15% over that period.

One reason for the surge in demand for construction projects is the $1.9T American Rescue Plan, which was signed by President Joe Biden early in his term. Now, that money is starting to fuel a wave of investment in city infrastructure, public services and other projects unlike any in decades, The New York Times reports.

Even so, the pace of starts is volatile. For March, total construction starts fell 12% month-over-month, with nonresidential building starts down 29% and residential starts off 3%.

“The volatility caused by the ebb and flow of large projects masks an underlying trend of strengthening in construction starts,” Dodge Construction Network Chief Economist Richard Branch said in a statement. “Nonresidential construction has benefited from the growing confidence that the worst of the pandemic is in the rear-view window."

Branch added that nationwide, the pipeline of projects waiting to start is filling, suggesting the growth trend will continue.

A separate report by the American Institute of Architects suggests the same conclusion. AIA’s Architecture Billings Index score for March came in at 58, up from 51.3 in February. During March, new project inquiries and design contracts both expanded, the organization reports.

A score above 50 on the index indicates an increase in billings among architects, and since the work architects do tends to be early in the construction process, an increase in billings is a leading indicator for the construction industry.