Bedford, MA - April 18, 2008 - New construction starts retreated 8% in March to a seasonally adjusted annual rate of $518.5 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building in March fell back after the elevated pace reported in January and February, which featured the start of several massive office and hotel projects. Residential building also weakened in March, as the correction for single family housing continued. Cushioning the decline for total construction was greater activity for nonbuilding construction (public works and electric utilities), reflecting the start of several large power plants. During the first three months of 2008, total construction on an unadjusted basis was $121.2 billion, down 19% from the same period a year ago. If residential building is excluded from the year-to-date figures, new construction starts in the first three months of 2008 were down 2%. Table for Monthly Summary of Construction Value.

The March statistics lowered the Dodge Index to 110 (2000=100), compared to 119 in February. "The lift provided by nonresidential building during the first two months of this year was not present in March," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "This is consistent with the general pattern expected for nonresidential building, in which the tight lending environment will dampen the volume of commercial projects as 2008 goes on. The March decline for housing is also consistent with what's expected this year. And, the rebound for public works and electric utilities in March, after a lackluster February, is in line with the belief that this sector in 2008 should be able to hold relatively close to last year's volume."

Nonresidential building in March plunged 23% to $206.8 billion (annual rate), after rising 36% in January and February combined. The first two months of this year were boosted by the start of a number of projects valued each in excess of $1 billion, including the World Trade Center Towers 2, 3, and 4 in lower Manhattan, plus the start of large hotel projects in Las Vegas NV and Atlantic City NJ. The absence of such large projects in March contributed to the overall decline for nonresidential building. Murray indicated, "While nonresidential building did fall 23% in March from a robust February, it's worth noting that nonresidential building for first quarter 2008 was essentially steady with fourth quarter 2007, and up 3% compared to first quarter 2007." Hotel construction in March was down sharply from an exceptional February, falling 67%. Office construction was also down from an exceptional February, falling 28%. The office category received some support in March from the start of the $304 million office portion of the $500 million Russia Wharf mixed-use project in Boston MA. Other large office projects that reached groundbreaking in March were located in Houston TX ($270 million), and Baltimore MD ($200 million). Rounding out the commercial sector, store construction in March fell 18%, while warehouses ran counter to this declining trend with a 21% gain. Manufacturing plant construction had a weak March, dropping 46%.

On the institutional side of the nonresidential market, two project types showed expansion in March. The educational building category advanced 12%, reflecting construction growth for a range of projects - primary and secondary schools, as well as colleges and universities. The dormitory category, which includes both college residences and military barracks, jumped 132% in March, with the push coming from the start of a $314 million military housing project in Norfolk VA and a $100 million student housing project at Auburn University in Alabama. The other institutional structure types showed reduced contracting in March relative to February. Healthcare facilities retreated 30%, although March did see an additional two large hospital projects reach groundbreaking, located in Escondido CA ($400 million) and Houston TX ($243 million). In similar fashion, the public buildings category dropped 37%, although March did include the start of a $478 million, 9-building campus in Maryland, to be used by the U.S. federal government. A substantial decline was reported in March for amusement-related projects, down 44%. More moderate retrenchment was shown by transportation terminals, down 16%; and churches, down 3%.

Residential building, at $185.5 billion (annual rate), slipped 1% in March. Single family housing retreated an additional 1%, providing more evidence that its lengthy correction is still in the process of reaching bottom. The single family pattern at the regional level showed weaker activity in the Northeast (down 12%) and the South Atlantic (down 5%), no change for the South Central, and some improvement in the West (up 1%) and the Midwest (up 8%). The multifamily category in March was essentially steady with its February amount. Large multifamily projects that reached groundbreaking were located in Boston MA ($179 million, as part of the Russia Wharf project), Bal Harbour FL ($111 million), Baltimore MD ($80 million), and Las Vegas NV ($75 million). Murray stated, "While the dollar amount for multifamily construction will be down about 20% this year, there are still a few large multifamily projects that are making it to the construction start stage in early 2008."

Nonbuilding construction jumped 18% in March to $126.2 billion (annual rate). Much of the growth came from electric utilities, which soared 146% with the start of major power plants in North Carolina ($1.1 billion), New York ($800 million), and Nebraska ($400 million), plus the start of a large wind farm in Iowa ($178 million). The public works sector in March showed a mix of pluses and minuses. Highway construction climbed 12%, helped by the start of a $206 million highway reconstruction project in Las Vegas NV. Sewer construction increased 6%, aided by the start of two large water reclamation facilities located in California ($143 million) and Nevada ($93 million). On the negative side, March showed reduced contracting for the following - water supply systems, down 4%; river/harbor development, down 6%; mass transit and site work, down 8%, and bridges, down 19%.

The 19% drop for total construction during the January-March period of 2008 relative to last year was due to shortfalls for residential building, down 40%; and nonbuilding construction, down 11%. The 3% year-to-date gain for nonresidential building was in contrast to the broad weakening trend. On a regional basis, total construction in the first three months of 2008 performed as follows - the Northeast, up 10%; the West, down 18%; the South Central, down 20%; the South Atlantic, down 27%; and the Midwest, down 32%.