September Construction Starts Dip 1.5% as Commercial Falls 18%

Total U.S. construction starts slipped 1.5 percent in September to a seasonally adjusted annual rate of $1.33 trillion, according to Dodge Construction Network. Commercial starts fell 18.4 percent as hotel, office and data center groundbreakings pulled back, while institutional starts rose 16.3 percent and highway and bridge work climbed 20.8 percent. Through nine months, total starts are still up 14.3 percent from the same period of 2025.

What Happened

Dodge released its September starts report on October 21 (Dodge Construction Network). Nonresidential building starts fell 6.3 percent to $583 billion, residential starts slipped 0.3 percent to $366 billion, and nonbuilding starts rose 5.5 percent to $377 billion (Dodge Construction Network). Sarah Martin, Dodge's director of economic research, said gains in institutional and nonbuilding construction "helped cushion the decline," and that "these sectors provided a counterweight to weaker commercial and single-family starts" (Construction Dive).

The September dip follows a much steeper August, when total starts fell 24.8 percent, according to Construction Dive.

The Numbers by Sector

• Commercial: Down 18.4 percent. Hotels fell 46.3 percent, offices and data centers fell 21.4 percent, and manufacturing fell 21.0 percent. Parking garages rose 33.9 percent and warehouses edged up 0.8 percent (Dodge Construction Network).
• Institutional: Up 16.3 percent, led by a 38.4 percent jump in education. Healthcare slipped 3.0 percent (Dodge Construction Network).
• Nonbuilding: Highway and bridge rose 20.8 percent, miscellaneous nonbuilding rose 13.7 percent and environmental public works rose 0.8 percent, while utilities fell 4.1 percent (Dodge Construction Network).
• Residential: Single-family starts fell 7.4 percent and multifamily rose 11.3 percent (Dodge Construction Network).
• Regions: Starts fell in the South Central (20 percent), Midwest (13 percent) and Northeast (1 percent), and rose in the West (33 percent) and South Atlantic (7 percent) (Dodge Construction Network).

Year-to-Date Picture

The longer view is stronger than the monthly figure. Through the first nine months, nonresidential starts are up 23.7 percent, nonbuilding is up 18.4 percent and residential is down 1.7 percent (Dodge Construction Network). On a 12-month basis ending in September, total starts are up 13.6 percent, with electric power and utility work up sharply while institutional work is down 2.8 percent (Dodge Construction Network). Single-family starts are down 7.6 percent over 12 months, while multifamily is up 5.3 percent (Dodge Construction Network).

Largest Projects That Broke Ground

• $4.6 billion South Valley data center in Silver Springs, Nevada (Dodge Construction Network).
• $4.3 billion Beacon Point data center in Robstown, Texas (Dodge Construction Network).
• $2.0 billion Vantage V41 data center campus in Fredericksburg, Virginia (Dodge Construction Network).
• $1.7 billion Big Rooter Power solar project in Bremond, Texas, and $1.6 billion Entergy Cypress Solar in Redfield, Arkansas (Dodge Construction Network).
• Multifamily leaders: the $820 million Four Seasons condominium tower in Austin, the $544 million One Montague Place tower in Brooklyn Heights, and the $329 million Ombelle mixed-use residential tower in Fort Lauderdale (Dodge Construction Network).

Even in a month when data center starts declined, the three largest nonresidential projects were all data centers (Dodge Construction Network).

How It Fits With Other September Indicators

The starts report is consistent with a mixed set of planning and design data. The Dodge Momentum Index rose 2.4 percent in September as institutional planning led, while the AIA billings index fell to 44.7, signaling fewer design contracts. Contractor backlog also rose, as covered in WCG's report on ABC's 8.7-month September backlog reading. On the housing side, Census data showed September housing starts fell 5.2 percent.

Implications for Owners, Developers, Contractors and Subs

• Institutional and public work: Education starts jumped 38.4 percent and highway and bridge work rose 20.8 percent (Dodge Construction Network). Contractors with public and school experience have the clearest near-term pipeline.
• Manufacturing caution: Manufacturing starts fell 21.0 percent for the month (Dodge Construction Network). Industrial contractors should look past single-month swings to their own bid lists, but the slowdown is worth watching after a year of large plant announcements.
• Northeast stability: The Northeast dipped only 1 percent (Dodge Construction Network), a steadier reading than the South Central and Midwest.
• Housing split: Multifamily gains against single-family declines (Dodge Construction Network) favor commercial-style residential builders over production homebuilding trades.

What to Watch

• Whether commercial starts rebound in October after two weak months.
• Continued strength in education and highway work as fiscal year budgets take effect.
• The size and number of data center starts, which have driven much of this year's gain.

Bottom Line

September construction starts eased slightly, with a sharp commercial pullback offset by institutional and infrastructure gains. Year-to-date totals remain up double digits, and demand is shifting toward schools, roads and multifamily housing.

Related Coverage

• Dodge Momentum Index Rises 2.4% in September as Institutional Planning Leads
• Architecture Billings Fall to 44.7 in September as Design Contracts Drop
• Contractor Backlog Rises to 8.7 Months in September as Data Centers Lead
• September Housing Starts Fall 5.2% to 1.221 Million Annual Rate

Image credit: Dodge Construction Network. Image from the source article.

Sources

• Dodge Construction Network, "Construction Starts Recede 1.5% in September": https://www.construction.com/construction-starts-recede-1-5-in-september/
• Construction Dive, "Commercial groundbreakings plunged 18% in September": https://www.constructiondive.com/news/commercial-groundbreakings-plunged-september/833741/