McGraw-Hill Construction Expects New Construction Starts to Rise 2 Percent in 2012June 29th, 2012 by DWM Magazine
The recently released 2012 Dodge Construction Outlook Midyear Update from McGraw-Hill Construction, which revises the forecasts provided last October at its annual Outlook Conference in Washington D.C., predicts total U.S. construction starts to increase 2 percent this year to $445 billion, up from the $434 billion reported for 2011. While slightly better than the flat performance for 2012 construction starts predicted last fall, the updated forecast still portrays an industry struggling to gain upward momentum.
“The construction industry has yet to move from a hesitant up-and-down pattern to more sustained expansion,” says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “After plunging 23 percent in 2009, new construction starts edged up only 1 percent in 2010 and were unchanged in 2011, so the modest 2 percent increase predicted for 2012 is really more of the same. The backdrop for the construction industry remains the fragile U.S. economy, which continues to see slow employment growth, diminished funding from federal and state governments, and the uncertainty related to the U.S. fiscal stalemate and the European debt crisis. On the plus side, energy costs are now receding, interest rates are very low, and lending standards are beginning to ease for commercial real estate development.”
According to the report, the construction market this year continues to see a mix of pluses and minuses by major sector, including:
• Single-family housing in 2012 will advance 21 percent in dollars, corresponding to a 19-percent increase in the number of units to 490,000 (McGraw-Hill Construction Dodge basis). While still at a very low amount, single-family housing for the past year has been able to register small yet steady gains; and
• Multifamily housing in 2012 will climb 19 percent in dollars and 18 percent in units, given rising occupancies and rents, which reflect elevated demand from potential homebuyers still reluctant or unable to move ahead with purchasing a single family home.
Additional reports and projections are available from McGraw-Hill Construction Research and Analytics.