Source: Dodge Data & Analytics, New York
The 2017 Dodge Construction Outlook sees total U.S. construction starts for 2017 advancing 5 percent to $713 billion, following increases of 11 percent in 2015 and an estimated 1 percent this year. Projected 8 percent gains for both residential and nonresidential building next year will accompany an expected 3 percent drop in nonbuilding construction.
“The U.S. construction industry has witnessed signs of deceleration in 2016, following several years of steady growth,” says Dodge Data & Analytics Chief Economist Robert Murray. “Total construction starts during the first half of this year lagged behind what was reported in 2015, raising some concern that the current construction expansion may have run its course.
“However, the early 2016 shortfall reflected the comparison to unusually elevated activity during the first half of 2015, lifted by 13 very large projects valued each at $1 billion or more. As 2016 has proceeded, the year-to-date shortfall has grown smaller, easing concern that the construction industry may be in the early stage of cyclical decline. Instead, the industry has now entered a more mature phase of its expansion, one that is characterized by slower rates of growth than what took place during the 2012-2015 period, but still growth.”
“On balance, there are a number of positive factors which suggest the construction expansion has room to proceed,” Murray affirms. “The U.S. economy in 2017 is anticipated to see moderate job growth, market fundamentals for commercial real estate should remain generally healthy, and more funding support is coming from state and local bond measures. Although the global economy in 2017 will remain sluggish, energy prices appear to have stabilized, interest rate hikes will be gradual and few, and a new U.S. president will have been elected.”
In year-over-year terms, sectors showing the most promise in 2017 will be single-family housing, rising 12 percent in total dollars and 9 percent in units; and, commercial building, increasing 6 percent on the heels of a 12 percent jump estimated for 2016. Institutional building will advance 10 percent, resuming its expansion after 2015–16 pauses. The educational facilities category is seeing an increasing amount of K-12 school construction, supported by the passage of recent bond measures. Public works construction will improve 6 percent, regaining upward momentum after slipping 3 percent in 2016. Highways and bridges will derive support from the new federal transportation bill, while environmental works should benefit from the expected passage of the Water Resources Development Act.
The 2017 forecast was presented at Dodge Data & Analytics’ 78th annual Outlook Executive Conference at the Gaylord National Resort and Convention Center in National Harbor, Md. Copies of the report with additional details by building sector can be ordered here or by calling 800/591-4462.