With the growing burden of an ever-declining residential market, new construction starts in 2008 are estimated at $558.5 billion, down 11 percent over
With the growing burden of an ever-declining residential market, new construction starts in 2008 are estimated at $558.5 billion, down 11 percent over 2007 midyear results, according to the Construction Outlook Midyear Update from New York-based McGraw-Hill Construction. Major findings of the forecast, authored by McGraw-Hill Vice President of Economic Affairs Robert Murray, include:
Single-family housing continues to weaken, with 2008 declines of 28 percent in dollar volume (31 percent in dwelling units), steeper than what occurred in 2007. The market is being adversely affected by falling home prices, mounting inventories and tight lending conditions.
Commercial building witnessed further expansion in 2006 and 2007, which carried over into the first quarter of 2008. However, the slower economy and tighter lending conditions are now causing projects to be deferred, and the loss of momentum will take firmer hold as the year proceeds. For 2008, commercial building will retreat eight percent in dollar volume, and 16 percent in square feet. Stores and warehouses are the most vulnerable to decline in the near term, while lesser reductions are anticipated for hotels and office buildings.
Institutional building in 2008 continues to see strong levels in groundbreaking of education projects, helped in particular by more expansion for colleges and universities. The midyear forecast for institutional building calls for a 2 percent gain in dollar volume, although square footage will settle back 3 percent.
Public works construction in 2008 will also rise 2 percent in dollars, owing to more federal transportation project funding in FY 2008, combined with an elevated focus on infrastructure repair and maintenance. Tighter fiscal conditions at both the federal and state levels of government are an emerging concern for the public works sector, but any restraint on construction is more likely to be experienced next year.
More information on the midyear report can be found at construction.ecnext.com/coms2/summary_0249-283822_ITM_analytics.