Construction Planning Drops 5th Straight Month Due to Interest Rate, Lending Woes

Construction Dive

The Dodge Momentum Index, a benchmark that measures nonresidential building planning, dropped nearly 1% in July due to tighter lending standards and higher interest rates, according to the Dodge Construction Network.

The commercial component ticked down 0.2%, while the institutional component fell 1.9% in July, according to Dodge. But compared to the beginning of the year, commercial planning fell 10%, whereas the institutional segment gained 16%.

“While both segments of the index fell this month, underlying project data points to divergent trends in the nonresidential sector,” said Sarah Martin, associate director of forecasting for Dodge Construction Network. “As we progress through the remainder of 2023, weaker commercial activity, resulting from tighter lending standards and higher interest rates, will counter sturdier institutional activity, bolstered by public funding and less sensitivity to interest rates.”

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