Megaprojects dominate January construction starts, core sectors slide

Total construction starts edged up 0.7% in January vs. December to an annualized rate of $1.24 trillion, according to Dodge Construction Network (DCN).

Despite the modest gain, activity was mixed at the start of 2026, underscoring how the recovery remains uneven across sectors.

And while growth is technically positive at the headline level, the underlying story is one of nonbuilding megaprojects propping up at an otherwise soft start to the year.

By the numbers

Residential starts declined 6.4%, and nonresidential building activity fell 15.4% in January month over month, while nonbuilding surged 24.3% on the back of a handful of massive energy and infrastructure projects, the report said.

“Nonbuilding construction remained the primary engine of growth in the first month of 2026,” said Eric Gaus, chief economist at DCN.

About half of January’s growth—nearly $20 billion—was driven by three nonbuilding sector projects. Gaus said total construction would have contracted without those projects.

On a year-over-year (y/y) basis, total starts were 5.0% higher than in January 2025, but the composition of that growth has shifted dramatically. Nonbuilding activity (+46.1%) is carrying the load, while residential (-17%) and institutional (-10.3%) categories continue to struggle, the report said.

Over the 12 months ending January 2026, total starts rose 6.1% vs. the same period a year earlier, supported by strong investment in utilities and infrastructure and a rebound in manufacturing.

Multifamily weakness drags residential

Residential starts fell 6.4% in January vs. December to a $345 billion annualized pace. While single-family activity was up 1.5%, multifamily activity slumped by 17.8% month-over-month (m/m).

Compared with January 2025, residential starts are down 17.0%, with single-family activity off 21.5% and multifamily down 9.2%.

The 12‑month trend shows a 6.0% decline in total residential starts. Single-family remains the primary drag, falling 15.2%, while multifamily posted a 13.6% increase, reflecting the long pipeline of large urban projects.

Manufacturing lifts nonres

Nonresidential building starts fell 15.4% in January m/m to a $378 billion annualized rate. Commercial activity was particularly weak, driven by a 52.2% fall in offices and data center activity.

Institutional starts dropped 15.2%, while manufacturing surged 97.5% m/m, continuing its multi-year expansion tied to semiconductor investment and clean‑energy supply chains.

Nonresidential starts are down 10.3% y/y, but commercial activity is up 14.2%, while institutional work is down 29.6%.

The 12‑month total through January shows nonresidential starts rose 5.5% compared with the same period a year earlier, with commercial up 19.4%, institutional down 4.4%, and manufacturing up 3.5%.

Nonbuilding: The growth engine

Nonbuilding construction activity surged 24.3% in January vs. December to a $522 billion annualized rate. The category was almost entirely lifted by electric power and utilities, up a whopping 184.8% m/m.

Other segments, including highways and bridges (-42.3%), miscellaneous nonbuilding (-31.5%), and environmental public works (-5.9%), were sharply lower.

Nonbuilding starts rose 21.0% over the 12 months ended in January vs. the same period a year earlier, with utility and gas projects up 67.9%, miscellaneous nonbuilding up 36.2%, and highways and bridges up 3.4%.

What it might mean for steel

January construction activity data suggest that utility-scale energy and liquefied natural gas (LNG) projects remain the strongest source of structural steel demand, while manufacturing construction—semiconductor and advanced industrial facilities—should support plate and long products.

Apparent weakness in commercial and institutional activity could weigh on light-gauge and rebar consumption. And a similar trend in residential activity, where softness—especially single-family—could impact demand for construction‑grade sheet and wire products.

The concentration of growth in a few megaprojects backs a major theme shared across several sessions at the Tampa Steel Conference earlier this month: Steel demand will remain uneven, driven by regional and sector-specific volatility in the early going of 2026.

David Schollaert

David Schollaert is deputy editor-in-chief for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. He can be contacted at david@steelmarketupdate.com or 724-720-1008.