Single-family housing should see steady growth into 2018, while multifamily construction will continue to settle back, according to Dodge Data & Analytics’ new 2018 Outlook Report.

Dodge chief economist Robert Murray presented the outlook in early November at the 79th annual Outlook Executive Conference in Chicago.

Dodge predicts that single-family sales will rise 9 percent in dollars, which equals a 7-percent increase in units to 850,000.

Several factors will help keep single-family sales growing, Murray said. The rates for 30-year fixed mortgages are still low—around 3.9 percent. Lending standards, which toughened up after the housing meltdown in 2008, are starting to ease as well. However, the 20-percent-down-payment requirement is still restraining first-time homebuyer demand, along with the high student debt of the millennial generation.

In 2015, single family housing showed improvement after stalling in 2014. Moderate growth took place in 2016 and 2017. Murray says sales are heading up, and home prices are rising at 5 percent to 6 percent year-over-year.

Murray says there are several positive factors that will boost the construction market — as well as some areas of concern.

“The U.S. economy next year is anticipated to see moderate job growth,” he said. “Two areas of uncertainty relate to whether tax reform and a federal infrastructure program get passed, with their potential to lift investment. By major sector, gains are predicted for residential building, up 4 percent and nonresidential building, up 2 percent, while nonbuilding construction stabilizes after two years of decline.”

The multifamily sector has reached a mature state, Murray said. After large year-over-year gains for much of the last decade, this category decreased 7 percent in 2017 and is projected to decline another 11 percent next year. The recent declines have been driven in part by a pullback in multifamily construction in New York City, though that market still continues to dominate the sector in terms of dollar value.

In other construction predictions for 2018, the commercial and institutional building segments are projected for further growth.

“We’ve now moved into a more mature state of expansion,” Murray said. “… But there is still ample evidence to suggest the construction industry has room to grow in 2018.”

The total construction industry saw increases from 11 to 13 percent per year from 2012 through 2015, but starts advanced 5 percent in 2016 and are estimated to rise 4 percent in 2017.

Looking ahead, Dodge projects 3-percent overall growth for construction in 2018.

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