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U.S. Construction Starts Had Three Consecutive Quarters of Positive Growth in 2017

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By: Anthony Locicero

Copy Editor, New York Post, Rodman Media

ConstructConnect, a leading provider of construction information and technology solutions in North America, released its  Q4 2017 Forecast Quarterly Report. The Winter 2017-18 starts forecast includes year-over-year estimates for 2017 that have become more upbeat than a quarter ago. Groundbreakings on several mega projects late this year have provided exceptional lift to the industrial and engineering type-of-structure categories.

“Out to 2021, residential will be the main driver of total construction starts, recording year-over-year increases of nearly +6.0% or more,” Chief Economist Alex Carrick said. “Non-residential building will disappoint, with gains of only about +2.0% each year. Engineering will be strong in 2018 and 2019, as energy initiatives and infrastructure work are promoted by Washington, but will then moderate in 2020-21.”

The forecast which combines ConstructConnect’s proprietary data with macroeconomic factors and Oxford Economics econometric expertise, shows some of the more robust 2018 starts forecasts:

  • Single-family residential, +8.8%
  • Warehouses, +4.7%
  • Nursing homes, +5.9%
  • Educational facilities, +4.2%
  • Roads, +5.9%
  • Bridges, +10.2%
  • Miscellaneous civil (power, oil and gas), +13.8%

2017 total starts are now expected to be +7.9% (versus an earlier calculated +4.5%). Residential has been upgraded to +10.1% and engineering/civil to +23.1%. Non-residential building has been left essentially flat at -0.5%.

For 2018, the new forecasts shave a bit off what was previously expected. Total starts are now projected to be +4.8%, a little slower than the +5.9% of a quarter ago. Residential will be +6.7% in 2018; non-res building, +1.9%; and heavy engineering/civil, +6.6%.

In residential construction, the multi-family market has had its turn and it will be the single-family market that will expand more rapidly moving forward, aided by family-formations among the millennial generation.

The forecast reports that educational facilities will grow faster than hospitals in 2018, but beginning in 2019 their positions will reverse. Some other non-residential building type-of-structure categories with bullish outlooks include: courthouses and prisons; warehouses; and nursing homes. Airports and sports stadiums will also be stepping into the construction spotlight.

The report noted a few ongoing economic trends:
  • A synchronous world expansion is underway, with North America, Japan, China and Europe all experiencing GDP growth;
  • Based on demographics, housing starts have fallen short of potential for almost a decade;
  • Office space demand will increasingly come from firms engaged in high-tech;
  • Prices for many internationally traded commodities are on the mend
 

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