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Deceleration in Total Construction Growth Will Continue
Total U.S. construction starts for 2019 are projected to hit $808 billion, remaining essentially even with the $807 billion estimated for 2018, according to a new report by Dodge Data & Analytics. By major sector in dollar terms, residential building will be down 2%, nonresidential building will match its 2018 amount, and nonbuilding construction will increase 3%.”
Dodge Data & Analytics’ chief economist Robert A. Murray says, “Over the past three years, the expansion for the U.S. construction industry has shown deceleration in its rate of growth, a pattern that typically takes place as an expansion matures. After advancing 11% to 14% each year from 2012 through 2015, total construction starts climbed 7% in both 2016 and 2017, and a 3% increase is estimated for 2018.”
The 2019 Dodge Construction Outlook notes mounting headwinds affecting construction include rising interest rates and higher material costs. So far, those have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works.
– Multifamily housing will slide 6% in dollars and 8% in units to 465,000
– Commercial building will retreat 3%, following 2% gains in 2017 and 2018
– Institutional building will advance 3%, picking up the pace slightly from its 1% gain in 2018
– Manufacturing plant construction will rise 2%, following the 18% jump that’s estimated for 2018
– Public works construction will increase 4%
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