Commercial Construction Surges 11.9% In September MoM

The September 2025 Dodge Construction Network data show a continued rebound in total construction starts, with a 3.1% month-over-month increase to a seasonally adjusted annual rate (SAAR) of about $1.26 trillion. The upturn is driven primarily by a sharp rise in nonresidential starts, which climbed 11.9% for the month, while residential starts rose 3.6%. Nonbuilding starts declined by 6.2%. On a year-to-date basis through September, total starts are up 3.5% versus the same period in 2024, with nonresidential activity up 5%, residential down 4.2%, and nonbuilding up 10.8%. Over the trailing 12 months, total starts recorded a 6.7% increase from the prior 12-month period, with nonresidential up 6.8%, residential down 1.4%, and nonbuilding up 16.7%.

Subsector highlights:

• Nonresidential construction: The sector advanced 11.9% month over month to $478 billion SAAR. Within this, commercial starts surged 22.5% year over year for the 12 months ending September 2025, with notable contributions from parking-garage, office, and institutional projects. Manufacturing starts were volatile, up 45.2% in September after a 24.4% drop the previous month. Through September, nonresidential starts are up 5% year-to-date, with commercial and industrial segments up about 10.9% while institutional starts slightly lag. The largest new nonresidential projects breaking ground in September included a $2.5 billion data center in Louisiana, a $1.7 billion public health laboratory in New York, and a $1.2 billion data center in Texas, underscoring the intensified data-center and institutional activity in this cycle.
• Residential construction: Starts rose 3.6% in September to a $379 billion SAAR. Single-family housing gained 1.7% while multifamily rose a robust 6.4%, signaling continued demand for rental and multifamily product. On a year-to-date basis through September, total residential starts are down 4.2% from a year earlier, with single-family down 12.1% and multifamily up 13.2%. For the 12 months ending September 2025, total residential starts declined 1.4%, with single-family down 7.6% and multifamily up 11.6%. The September surge in multifamily activity aligns with ongoing urban housing needs and investor demand for rental housing, though single-family production remains under pressure from higher financing costs and tighter lending standards.
• Nonbuilding construction: Starts fell 6.2% in September to a $404 billion SAAR. The decline was led by a sharp drop in utilities (down 62.5% m/m), but gains occurred in highways and bridges (up 7.4%), environmental public works (up 6.6%), and miscellaneous nonbuilding (up 116.5%). Year-to-date through September, nonbuilding starts are up 10.8%, with highways and bridges, environmental public works, and miscellaneous nonbuilding all contributing meaningfully, while utilities remain a drag. For the 12 months ending September 2025, nonbuilding starts were up 16.7%, driven by strong growth in miscellaneous nonbuilding and utilities, despite the utilities pullback in September.

Regional and megaproject context:

• Regional shifts: September starts increased in the Northeast (36.3% m/m), Midwest (10.9%), and West (1.4%), while the South Atlantic (−0.3%) and South Central (−10.6%) saw declines. This pattern suggests a broad-based recovery with pockets of regional softness.
• Megaprojects: A handful of very large projects continued to influence total starts, reinforcing the importance of mega projects in shaping the overall construction economy. These projects also hint at potential future procurement and supply-chain dynamics as lead times and costs react to heightened inbound demand.

Implications for the market:

• Near-term outlook: The ongoing recovery in nonresidential construction, especially commercial and data-center activity, points to continued demand for labor, steel, concrete, and related materials, even as consumer-led residential activity remains uneven. If nonresidential momentum persists into Q4, total annual growth could exceed the inflation-adjusted pace implied by September figures.
• Risks and considerations: Financing conditions, interest rate expectations, and persistent cost pressures could modulate the pace of new starts. The heavy concentration of value in megaprojects means that a few large groundbreakings can disproportionately influence monthly and quarterly totals, potentially amplifying volatility.

September 2025 marks another solid step in construction activity, with nonresidential gains offsetting some residential softness and nonbuilding volatility. The data reflect a sector transitioning into a higher-gear cycle driven by data centers, office redevelopment, and infrastructure demands, while regional dynamics and megaprojects continue to shape the quarterly and annual totals.

More information is available here.

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David Shiller

David Shiller is the Publisher of LightNOW, and President of Lighting Solution Development, a North American consulting firm providing business development services to advanced lighting manufacturers. The ALA awarded David the Pillar of the Industry Award. David has co-chaired ALA’s Engineering Committee since 2010. David established MaxLite’s OEM component sales into a multi-million dollar division. He invented GU24 lamps while leading ENERGY STAR lighting programs for the US EPA. David has been published in leading lighting publications, including LD+A, enLIGHTenment Magazine, LEDs Magazine, and more.

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