U.S. Construction Starts Had Three Consecutive Quarters of Positive Growth in 2017
ConstructConnect, a provider of construction information and technology solutions in North America, announced Nov. 14 the release of its Q4 2017 Forecast Quarterly Report. The winter 2017–2018 starts forecast includes year-over-year estimates for 2017 that have become more upbeat than a quarter ago. Groundbreakings on several megaprojects late this year have provided exceptional lift to the industrial and engineering type-of-structure categories.
“Out to 2021, residential will be the main driver of total construction starts, recording year-over-year increases of nearly +6.0 percent or more,” explained Chief Economist Alex Carrick. “Nonresidential building will disappoint, with gains of only about +2.0 percent each year. Engineering will be strong in 2018 and 2019, as energy initiatives and infrastructure work are promoted by Washington, but will then moderate in 2020–2021.”
The forecast, which combines ConstructConnect’s proprietary data with macroeconomic factors and Oxford Economics econometric expertise, shows some of the more robust 2018 starts forecasts:
- Single-family residential, +8.8 percent
- Warehouses, +4.7 percent
- Nursing homes, +5.9 percent
- Educational facilities, +4.2 percent
- Roads, +5.9 percent
- Bridges, +10.2 percent
- Miscellaneous civil (power, oil and gas), +13.8 percent
2017 total starts are now expected to be +7.9 percent (versus an earlier calculated +4.5 percent). Residential has been upgraded to +10.1 percent and engineering/civil to +23.1 percent. Nonresidential building has been left essentially flat at –0.5 percent.
For 2018, the new forecasts shave a bit off what was previously expected. Total starts are now projected to be +4.8 percent, a little slower than the +5.9 percent of a quarter ago. Residential will be +6.7 percent in 2018; non-res building, +1.9 percent; and heavy engineering/civil, +6.6 percent.
In residential construction, the multifamily market has had its turn and it will be the single-family market that will expand more rapidly moving forward, aided by family-formations among the millennial generation.
The forecast reports that educational facilities will grow faster than hospitals in 2018, but beginning in 2019 their positions will reverse. Some other nonresidential building type-of-structure categories with bullish outlooks include: courthouses and prisons; warehouses; and nursing homes. Airports and sports stadiums will also be stepping into the construction spotlight.
The report noted a few ongoing economic trends:
- A synchronous world expansion is underway, with North America, Japan, China and Europe all experiencing GDP growth.
- Based on demographics, housing starts have fallen short of potential for almost a decade.
- Office space demand will increasingly come from firms engaged in high-tech.
- Prices for many internationally traded commodities are on the mend.