U.S. Construction Starts to Climb 3 Percent in 2018

Window & Door
November 13, 2017
Markets

Dodge Data & Analytics released its 2018 Dodge Construction Outlook. The report predicts that total U.S. construction starts for 2018 will climb 3 percent to $765 billion.

“The U.S. construction industry has moved into a mature stage of expansion. After rising 11 percent to 13 percent per year from 2012 through 2015, total construction starts advanced a more subdued 5 percent in 2016,” says Robert Murray, chief economist for Dodge Data & Analytics.

Murray cites several positive factors which suggest that the construction expansion has further room to proceed, saying, “The U.S. economy next year is anticipated to see moderate job growth. Long-term interest rates may see some upward movement but not substantially. While market fundamentals for commercial real estate won’t be quite as strong as this year, funding support for construction will continue to come from state and local bond measures. Two areas of uncertainty relate to whether tax reform and a federal infrastructure program get passed, with their potential to lift investment. Overall, the year 2018 is likely to show some construction project types register gains while other project types settle back, with the end result being a 3 percent increase for total construction starts." Murray states that gains are predicted for residential building, up 4 percent.

The report says that the pattern of construction starts by more specific segments indicates single family housing will rise 9 percent in dollars, corresponding to a 7 percent increase in units to 850,000 (Dodge basis). Continued employment growth has eased some of the caution shown by potential homebuyers, while older millennials in their 30s are helping to lift demand for single family housing. A modest boost will also come from rebuilding efforts in Texas and Florida after Hurricanes Harvey and Irma.

Order a copy of the report here.