New Construction Starts to Rise 2% in 2012, Says McGraw-Hill Midyear Update
27 Jun, 2012
McGraw-Hill Construction (http://construction.com/), part of The McGraw-Hill Companies, released its 2012 Dodge Construction Outlook Midyear Update projections, which revise the forecasts provided last October at the firm's annual Outlook Conference in Washington DC. The Outlook Midyear Update predicts that total construction starts for the U.S. will increase 2% this year to $445 billion, up from the $434 billion reported for 2011. While slightly better than the flat performance for 2012 construction starts predicted last fall, the updated forecast still portrays an industry struggling to gain upward momentum.
"The construction industry has yet to move from a hesitant up-and-down pattern to more sustained expansion," stated Robert A. Murray, Vice President of Economic Affairs for McGraw-Hill Construction. "After plunging 23% in 2009, new construction starts edged up only 1% in 2010 and were unchanged in 2011, so the modest 2% increase predicted for 2012 is really more of the same. The backdrop for the construction industry remains the fragile U.S. economy, which continues to see slow employment growth, diminished funding from federal and state governments, and the uncertainty related to the U.S. fiscal stalemate and the European debt crisis. On the plus side, energy costs are now receding, interest rates are very low, and lending standards are beginning to ease for commercial real estate development."
Given these divergent factors, the construction market this year continues to see a mix of pluses and minuses by major sector, as follows:
• Single family housing in 2012 will advance 21% in dollars, corresponding to a 19% increase in the number of units to 490,000 (McGraw-Hill Construction Dodge basis). While still at a very low amount, single family housing for the past year has been able to register small yet steady gains.
• Multifamily housing in 2012 will climb 19% in dollars and 18% in units, given rising occupancies and rents, which reflect elevated demand from potential homebuyers still reluctant or unable to move ahead with purchasing a single family home.
• Commercial building in 2012 will grow 10%, following the 12% gain in 2011. Warehouses and hotels will see the largest percentage increases, joined this year by a moderate gain for stores while office construction sees more privately financed projects but less government office buildings.
• The institutional building market in 2012 will fall an additional 10%, after sliding 11% in 2011. The tough fiscal environment for states and localities continues to dampen school construction, and the uncertain economic environment is restraining healthcare facilities.
• The manufacturing building category in 2012 will retreat 20%, following the 75% jump in 2011 which featured the start of several unusually large projects.
• Public works construction in 2012 will slide a further 6%, after last year's 14% decline. This reflects government spending cuts and the absence of a multiyear federal transportation bill.
• Electric utility construction in 2012 will essentially hold steady with its exceptionally strong 2011 amount, helped by this year's start of two large nuclear power projects.
Copies of the report will be available on June 28th at http://analyticsstore.construction.com/index.php.
Additional reports and projections are available from McGraw-Hill Construction Research and Analytics, http://construction.com/market_research.
About McGraw-Hill Construction:
McGraw-Hill Construction connects people, projects, and products across the construction industry. For more than a century, it has remained North America's leading provider of project and product information, plans and specifications, and industry news, trends, and forecasts.
McGraw-Hill Construction serves more than one million customers in the global construction industry through Dodge, Sweets, Architectural Record, Engineering News-Record, GreenSource, and SNAP. To learn more, visit www.construction.com or follow @mhconstruction on Twitter.
About The McGraw-Hill Companies:
McGraw-Hill announced on September 12, 2011 its intention to separate into two public companies: McGraw-Hill Financial, a leading provider of content and analytics to global financial markets, and McGraw-Hill Education, a leading education company focused on digital learning and education services worldwide. McGraw-Hill Financial's leading brands include Standard & Poor's Ratings Services, S&P Capital IQ, S&P Indices, Platts energy information services, and J.D. Power and Associates. With sales of $6.2 billion in 2011, the Corporation has approximately 23,000 employees across more than 280 offices in 40 countries. Additional information is available at http://www.mcgraw-hill.com/.