New construction starts dropped 4 percent in July after a strong June, to a seasonally adjusted annual rate of $512.9 billion, according to McGraw-Hill Construction Dodge, a division of the McGraw Hill Companies.

Nonresidential building declined 1 percent to $154.9 billion. School construction jumped 12 percent and healthcare facilities increased 22 percent, aided by the start of a $200 million hospital in Chicago. Warehouses jumped 44 percent and hotel construction leaped 54 percent with the help of a $135 million convention center-related hotel in Denver. On the negative side, store construction dropped 1 percent, office construction was down 25 percent and manufacturing plant construction plunged 29 percent.

Residential building also dropped 1 percent in July, but the more significant decline was in non-building construction, which declined 15 percent to $90.2 billion, following a 29 percent increase in June.

Through the first seven months of 2003, total construction activity was down 1 percent year over year, with residential building up 9 percent, nonresidential down 5 percent and non-building construction down 15 percent. On a regional basis, January through July, the West was up 5 percent, the South Central up 3 percent, the South Atlantic up 2 percent, the Midwest down 1 percent and the Northeast down 18 percent.