The value of new construction starts in January advanced 2 percent compared to December, reaching a seasonally adjusted annual rate of $722.5 billion, according to Dodge Data & Analytics. The slight gain followed the loss of momentum that was reported toward the end of 2018, with total construction declines of 7 percent in November and 10 percent in December.

Each of the three main construction sectors in January registered modest growth. Residential building climbed 4 percent, lifted by a rebound for multifamily housing. Nonresidential building edged up 1 percent, reflecting a stronger pace for its commercial building segment including large office projects in Reston, Va., Houston, Boston, Austin, Texas, and Seattle. Nonbuilding construction also edged up 1 percent.

On an unadjusted basis, total construction starts in January were $51.5 billion, down 12 percent from the same month a year ago. On a 12-month moving total basis, total construction starts for the 12 months ending January 2019 held steady with the corresponding amount for the 12 months ending January 2018.

“January’s slight increase suggests that construction starts are beginning to stabilize after the diminished activity reported at the end of last year. This is consistent with the belief that total construction starts for 2019 will be able to stay close to last year’s volume. It’s true that the rate of growth for total construction starts has subsided from the 7-percent annual gain reported back in 2017, but it’s still too early to say that construction activity has made the transition from deceleration to decline,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “In early 2019, there are several near-term positives for construction. Interest rates have settled back from levels reached during last year’s fourth quarter, material prices appear to be rising more slowly and the partial government shutdown was brought to a close. The federal budget deal signed into law on February 15 included a 2-percent increase to $45.3 billion for the federal-aid highway obligation ceiling, as called for by the 2015 Fixing America’s Surface Transportation Act. However, the benefits of tax reform on economic growth are expected to wane this year. Furthermore, the most recent survey of bank lending officers conducted by the Federal Reserve suggests that a more cautious lending stance emerged during the latter half of 2018, especially with regard to loans for multifamily projects.”