Project Starts Projected to Rise 6 percent in 2022


Construction starts will increase by 6 percent next year, greater than 2019 peak levels, according to a forecast by Dodge Construction Network.

The forecasted increase in construction starts represents a decrease in growth from 2021, which Dodge predicts will total 12 percent.

Richard Branch, Dodge chief economist, says the main driver of the predicted 2022 increase in construction starts is residential construction. “When you take those numbers out of the equation, construction starts are predicted to rise by only 4 percent, dropping below 2019 figures,” he said. “There is a long road back to full recovery for construction. But assuming that all comes to pass, we’re looking at a fairly modest to moderate pace of growth in 2022 construction starts.”

Dodge’s Momentum Index, which has risen throughout 2021, is now at a 13-year high, according to Branch. The index measures nonresidential construction projects in the planning phase. Branch adds that the count of general building projects being bid is ahead of where the industry found itself at the start of 2020, and a little behind where the industry was in terms of bids during 2019.

Continued material price increases and supply shortage could impact 2022 construction project starts, he said. Although the price increases are beginning to ebb, they’re still up 30 percent compared to Q4 2020. Branch predicts these increases to continue until mid-2022.

Material delivery delays are impacting the project schedules of 60 percent of small contractors, according to Branch. “And that’s causing production delays, shipping delays and overall project delivery delays,” he said. “Our data show that construction projects in pre-planning stages are taking about nine months longer to break ground than they were prior to February 2020.”

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