New York-based McGraw-Hill Construction recently released its annual Construction Outlook Midyear Update, providing insight into the performance of the construction industry through the end of 2008. The major findings of the forecast, authored by Robert Murray, vice president of economic affairs for McGraw-Hill Construction, include:
New construction starts for 2008 are estimated at $558.5 billion, down 11%.
Single-family housing continues to weaken, with 2008 declines of 28% in dollar volume and 31% in dwelling units, steeper than what occurred in 2007. Not surprisingly, the single-family housing market is being adversely affected by many factors, including 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 8% in dollar volume and 16% 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 a strong amount of educational structures reach ground-breaking, helped in particular by more expansion for colleges and universities around the country. The 2008 forecast for institutional building calls for a 2% gain in dollar volume, although square footage will settle back 3%.
Public works construction in 2008 will also rise 2% in dollars. The push will come from greater federal funding for transportation projects in fiscal 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.