2013 Dodge Construction Outlook predicts total U.S. construction starts will rise 6 percent next year
McGraw-Hill Construction, part of The McGraw-Hill Companies, presented the 2013 Dodge Construction Outlook at the 74th annual Outlook Executive Conference in Washington, D.C., this week. The report predicts total U.S. construction starts in 2013 will rise 6 percent to $483.7 billion, slightly higher than the 5 percent increase estimated for 2012.
"As reported by McGraw-Hill Construction, new construction starts in 2010 edged up 2 percent, followed by another 1percent gain in 2011, and 2012 is headed for a 5 percent increase to $458 billion. This still leaves the volume of total construction starts 32 percent below the 2005 peak on a current dollar basis, and down about 50 percent when viewed on a constant dollar basis," said Robert Murray, vice president of Economic Affairs, in an October 25 release. "The modest gains experienced during the past two years have in effect produced an extended bottom for construction starts, in which the process of recovery is being stretched out."
The 2013 Dodge Construction Outlook details the forecasts for each construction sector, as follows.
- Multifamily housing will rise 16 percent in dollars and 14 percent in units, marking healthy percentage gains yet slower growth than what took place during 2011 and 2012. Improved market fundamentals will help to justify new construction, and this structure type continues to be viewed favorably by the real estate finance community.
- Commercial building will increase 12 percent, at a slightly faster pace than the 5 percent gain estimated for 2012. Both warehouses and hotels will benefit from lower vacancy rates, while store construction will feature more upgrades to existing space and the derived lift coming from gains for single family housing. The increase for office construction will be modest, as new privately financed projects continue to be scrutinized carefully by lenders. Next year's level of commercial building in current dollars will still be more than 40 percent below the 2007 peak.
- Institutional building will level off, following the steep 13 percent drop estimated for 2012. For educational facilities, K-12 construction will slip further while college and university construction should at least stabilize. Healthcare facilities are expected to make a modest rebound after this year's downturn.
- Single family housing will grow 24 percent in dollars, corresponding to a 21percent increase in units to 615,000. The positives for single family housing have become more numerous: The pace of foreclosures has eased, home prices are stabilizing and mortgage rates are at record lows.
- The manufacturing building category will grow 8 percent, showing improvement after its 2012 decline.
Copies of the report with additional details by building sector can be ordered here.