U.S. construction activity declined sharply in February, as a steep drop in nonbuilding projects outweighed gains across residential and nonresidential building sectors.
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Total construction starts fell 13.2% to a seasonally adjusted annual rate of $1.08 trillion, according to data from Dodge Construction Network. The downturn highlights ongoing volatility in construction activity, particularly in infrastructure-related segments.
While building sectors showed signs of recovery, nonbuilding activity dropped significantly, falling 49.4% compared to January levels. This sharp decline erased gains seen in other areas and pulled overall construction starts lower for the month.
“After a weak start to the year, nonresidential and residential building starts steadily rebounded throughout February,” said Sarah Martin, associate director of forecast at Dodge Construction Network.
“Conversely, nonbuilding activity slowed down last month – normalising from elevated levels in January.”
Despite the monthly decline, the data suggests that January’s unusually strong nonbuilding performance may have skewed comparisons, with February reflecting a return to more typical levels of activity.
Residential construction rose 8.3% in February, reaching a seasonally adjusted annual rate of $374 billion. Single-family housing increased by 4%, while multifamily construction saw a stronger 15.9% gain, signaling continued demand for rental and multi-unit developments.
Nonresidential building also posted solid growth, rising 17.8% to $442 billion. The increase was driven largely by a surge in commercial construction, which jumped 48.5%, fueled by continued investment in office developments and data center projects.
Institutional construction rose 8.7%, supported by education projects, although healthcare and manufacturing segments recorded declines.
Nonbuilding construction dropped to $265 billion following a strong January, with electric power and utility projects experiencing the most significant pullback. However, highways, bridges, and environmental public works saw modest increases.
Several major developments broke ground during the month, including a $3 billion Google data center campus in Miami, Texas, a $3 billion Polaris Forge 2 AI data center in North Dakota, and the $1.53 billion Airside D expansion at Tampa International Airport.
Year-to-date figures show total construction starts down 1.9% through February. Residential activity has declined 12.4%, while nonresidential starts slipped 2%. In contrast, nonbuilding construction remains up 9.9% compared to the same period last year.
Over the past 12 months, total construction starts increased 5.2%, with nonresidential construction rising 6.1% and nonbuilding activity up 17%. Residential construction, however, declined 6.3% over the same period, reflecting ongoing affordability challenges and market constraints.
The February slowdown underscores how dependent overall construction activity can be on large-scale infrastructure and utility projects, which often fluctuate month to month due to funding cycles, permitting timelines, and seasonal factors.
The strength in data center construction continues to be a major driver of nonresidential growth, reflecting rising demand for digital infrastructure and artificial intelligence capabilities. Meanwhile, gains in multifamily housing suggest developers are still responding to rental demand, even as higher interest rates and financing challenges weigh on single-family construction.
However, the persistent year-to-date decline in residential starts signals ongoing affordability pressures and supply constraints in the housing market. Combined with volatility in nonbuilding sectors, the data points to an uneven recovery across the construction industry.
Looking ahead, industry analysts will be watching whether infrastructure spending stabilizes in the coming months and whether momentum in commercial and data center construction can offset continued weakness in housing.
Originally reported by Andy Brown, Head of Content, Construction and Engagement in Construction Briefing.
