Leading Index for Commercial Real Estate "Loses Steam in August"

From Dodge Data Analytics: Dodge Momentum Index Loses Steam in August

The Dodge Momentum Index dropped 3% in August to 148.7 (2000=100) from the revised July reading of 154.0. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The commercial planning component lost 2% in August, while the institutional component fell by 6%.

Projects entering the earliest stages of planning have declined following the torrid pace set in the spring. The decline in August was the third consecutive drop in the Momentum Index, which is now off 14% from the most recent high in May, since May the commercial component is down 10% and the institutional component is 22% lower. This reversal comes as prices for materials used in nonresidential buildings increase in combination with a shortage of labor and a rising number of new COVID-19 cases from the Delta variant, all working in concert to undermine confidence in the fledgling construction recovery. There were some pockets of strength in August, however, as more data center, education and warehouse projects moved into planning relative to the prior month. Additionally, the overall level of the Momentum Index is 19% higher than one year ago; institutional planning was up 17% and commercial planning was 20% higher than last year.
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This graph shows the Dodge Momentum Index since 2002. The index was at 148.7 in August, down from 154.0 in July.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a decline in Commercial Real Estate construction through most of 2021, but perhaps a pickup towards the end of the year, and growth in 2022 (even with the decline in the August index).