The value of new construction starts dropped 11 percent in March to a seasonally adjusted annual rate of $468.9 billion, according to the Dodge division of McGraw-Hill Construction. Both single family housing and public works were down from the strong contracting reported at the beginning of 2002.
"The pace of construction activity in January and February was unusually strong, aided by warm winter weather that helped to push forward the timing of construction starts," said Robert Murray, vice president of economic affairs for McGraw-Hill Construction. "The March decline in effect compensates for the heightened activity at the start of 2002, so perhaps a better reading of the construction industry comes from looking at the average for the year's first three months. Total construction during the first quarter of 2002 proceeded at an annual rate of $501 billion, a 2 percent gain over both the previous quarter and the average for 2001. There would be mounting concern should the March rate of contracting be repeated in April and May."
Residential building and nonbuilding construction both dropped 11 percent in March and nonresidential building slipped 10 percent. "Over the next several months, single family housing may be dampened by the sluggish employment picture, but the low cost of financing should continue to support homebuyer demand," said Murray. Residential building was down 21 percent in the Midwest, 14 percent in the Northeast, 8 percent in the South Central and the West and 7 percent in the South Atlantic.
On a regional basis in the first quarter, total construction was up 12 percent in the South Atlantic, 6 percent in the Midwest, 4 percent in the Northeast, while dropping 9 percent in the West and 13 percent in the South Central.