New construction starts are forecast to rise six percent this year to $506 billion, according to the mid-year update to the 2013 Construction Outlook from McGraw Hill Construction, a division of McGraw Hill Financial. This is the same rate of increase for total construction starts that was predicted last October, and follows the eight percent gain that took place in 2012.
“The recovery for construction continues to unfold in a selective manner, proceeding against the backdrop of the sluggish U.S. economy,” says Robert A. Murray, vice president of economic affairs for McGraw Hill Construction. “While the degree of uncertainty affecting the economy seems to have eased a bit from last year, tight government financing continues to exert a dampening effect on both the economy and the construction industry. On the positive side for construction, the demand for housing remains strong, market fundamentals for commercial building are strengthening and lending standards for commercial real estate loans continue to ease gradually. On balance, the recovery for construction is making progress, but at a single-digit pace, given the mix of pluses and minuses by major sector.”
Sectors of the construction market growing the most rapidly are single family housing (plus 28 percent), multi-family housing (plus 23 percent), commercial building (plus 15 percent) and public works (plus three percent).
Their gains were at least partly negated by the slides in institutional building (minus five percent), manufacturing building (minus eight percent) and the precipitous plunge in electric utilities (minus 40 percent following a record-high in 2012).
