Washington, D.C., August 21, 2025
News Summary
In July, total construction starts saw a sharp decline of 10.2%, driven mainly by a 30.1% drop in nonresidential building projects. While residential starts struggled, nonbuilding construction experienced notable growth, increasing by 20.4%. Year-to-date figures show a mixed performance across construction types, highlighting the complexities within the industry as it adapts to changing economic conditions.
Washington, D.C. – A significant downturn in construction activity was observed in July 2025, with total construction starts plummeting by 10.2% compared to the previous month, resulting in a seasonally adjusted annual rate of $1.19 trillion. The decline is notably steep in the nonresidential building sector, with construction starts falling by 30.1%, indicating a substantial reversal from previous trends.
In contrast, nonbuilding construction projects showed considerable growth, surging 20.4% in July. This dynamic situation highlights the ongoing shifts in the construction industry as it navigates fluctuating economic conditions.
Year-to-date (YTD) statistics reveal a mixed performance across construction types. Total construction starts have increased by 1.6% compared to the same period last year, with nonresidential starts up by 4.3%. Residential starts, however, have faced a decline of 4.4% YTD. In a longer view, for the twelve months ending July 2025, total construction activity has risen 4.1% year-over-year, supported by a 4.6% increase in nonresidential projects and a modest 0.7% reduction in residential starts.
The downturn in nonresidential building starts, which now sit at an annual rate of $443 billion, has been influenced by falling commercial construction by 8.5% and a dramatic decrease in manufacturing starts, which plummeted 84.7%. Institutional construction also saw a decline, particularly in education-related projects, which fell 13.3% month-over-month.
In July, significant nonbuilding constructions included the Empire Wind Offshore Wind Energy Project in New York, valued at $3.0 billion, and the A’s Ballpark in Las Vegas at $1.8 billion. Utilities projects were particularly strong, with a month-over-month surge of 127.2% and miscellaneous nonbuilding projects growing by 50.0%.
For the residential sector, building starts decreased to an annual rate of $356 billion in July, with single-family home construction up by 1.2% while multifamily projects saw a significant drop of 9.5%. Ongoing trends in the residential sector have also revealed a YTD decline in overall starts, particularly for single-family constructions that are down 10.1%.
Regionally, construction starts were generally mixed, with the Northeast experiencing an increase, while the Midwest, West, South Central, and South Atlantic faced declines in construction activities during July.
Industry Insights
Eric Gaus, Chief Economist at Dodge Construction Network, emphasized that construction starts reversed in July, affecting the previous month’s gains. The impact of the declining nonresidential sector, along with substantial growth in nonbuilding categories, illustrates the complexities faced by the construction industry amid varied economic signals.
Key Project Highlights
- Empire Wind Offshore Wind Energy Project – New York ($3.0 billion)
- A’s Ballpark – Las Vegas, Nevada ($1.8 billion)
- Boardman to Hemingway Power Transmission Line – Boardman, Oregon ($1.6 billion)
- UU West Valley Eccles Health Campus – West Valley City, Utah ($855 million)
- Mercy Hospital Campus – Wentzville, Missouri ($650 million)
- Meta Data Center Campus – Bowling Green, Ohio ($550 million)
- Rangel Houses Comprehensive Repair/Renovation – New York ($552 million)
- 20 Long Slip Apartment Tower-Pool – Jersey City, New Jersey ($365 million)
Conclusion
The construction industry is currently at a crossroads, with sharp declines in nonresidential projects overshadowed by growth in nonbuilding construction. The future remains uncertain as increases in utility and miscellaneous projects might offset the losses in other segments.
FAQs
What caused the drop in nonresidential construction starts in July 2025?
The nonresidential construction starts fell by 30.1% due to decreasing activity in commercial, institutional, and manufacturing sectors, alongside a general reversal of previous gains in construction activity.
How did residential construction perform in July 2025?
Residential construction starts decreased to an annual rate of $356 billion, with single-family starts rising slightly by 1.2%, while multifamily starts dropped significantly by 9.5%.
What were the trends in nonbuilding construction?
Nonbuilding construction saw a notable increase of 20.4% in July 2025, driven by a substantial growth in utility projects and miscellaneous nonbuilding projects which increased by 127.2% and 50% respectively.
Chart Overview
| Construction Type | Change in July 2025 | Year-to-Date Change |
|---|---|---|
| Total Construction Starts | -10.2% | +1.6% |
| Nonresidential Building Starts | -30.1% | +4.3% |
| Residential Starts | -3.1% | -4.4% |
| Nonbuilding Construction Starts | +20.4% | +5.3% |
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Additional Resources
- Construction Starts Remained Flat in February
- Wikipedia: Construction
- Construction on Historic Redevelopment of Mary Ellen McCormack Housing Complex
- Google Search: Mary Ellen McCormack Housing Complex
- AHSC Starts Construction on Boston Affordable Project
- Google Scholar: Boston Affordable Construction
- Construction Starts on Crescent Towing and Boston Towing Newbuilds
- Encyclopedia Britannica: Towing
- Construction Begins on Turning Empty Office Space into Residential Units
- Google News: Office Space to Residential Construction
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