By Robert J. Hughes
Staff Reporter of The Wall Street Journal
Construction starts fell 1% in December, indicating that the industry slowdown has abated somewhat.

The value of new-construction contracts fell to a seasonally adjusted annual rate of $479.9 billion as a result of a decline in commercial building that was mainly offset by an increase in single-family housing, according to the latest report from F.W. Dodge, a building-research division of publisher McGraw-Hill Cos. Public works and school construction also showed strength, the report said.
"The construction industry slipped back during the first half of 2001, but then proved to be one of the more resilient sectors of the economy as the year progressed," said Robert A. Murray, vice president of economic affairs for F.W. Dodge. "The relatively modest deceleration for total construction was the result of a varied performance by sector."
Commercial building lost some momentum in the first half of last year, and then weakened further after Sept. 11. But single-family housing was strong in 2001, helped by low mortgage rates, and school construction was at a record high, Mr. Murray said. In addition, public-works construction continued to strengthen, and electric- power-plant construction increased.
The Dodge Index, a measure of national construction value that uses 1996 as a base year of 100, was at 145 for December, up from 144 in November. The index began the year at 153, but weakened during the summer and stabilized as the year came to a close.
Residential building in December rose 1% to an annual rate of $215.2 billion from the prior month. Single-family housing fell 2%; it was offset by a 15% increase for multifamily units. For all of 2001, residential building grew 4% to $215.9 billion, the result of a 5% gain in single-family housing, combined with a 2% decline in multifamily housing.
Nonbuilding construction in December grew 16% to an annual rate of $104.2 billion, following a weak November for public works such as highways, bridges, sewers and water-supply systems. Construction of highways and bridges jumped 62%, boosted by a $332 million bridge project in the San Francisco area. Water supply systems were up 9%, and sewers were up 8%, but water development projects fell 20%, and electric-utility construction dropped 21% in the month.
For the full year, nonbuilding construction climbed 14% to $103.4 billion. The biggest jump, 20%, came from miscellaneous public works, spurred by the start of a $1.6 billion natural-gas pipeline running from Alabama across the Gulf of Mexico to Florida.
Nonresidential building fell 11% to an annual rate of $160.4 billion, after an increase in November. Commercial building was weaker. Office construction was down 27%, hotels down 24% and stores down 11%. Warehouses had a 9% gain. For the full year, nonresidential building was down 4% to $165.8 billion. The largest declines were for offices, which were down 22%; hotels were down 21%; and warehouses were down 15%. Office space, in particular, suffered from "the dot-com correction," Mr. Murray noted, "as a substantial amount of sublease space was put back in the market."