ConstructConnect revised its U.S. construction starts growth projection for 2017, according to the firm’s third quarter forecast report. It projects construction starts will grow by 4.5 percent in 2017 compared to 2016.
ConstructConnect previously predicted a 4.8-percent increase in its second quarter report. Its 2018 projections remain about the same as stated in the last quarter.
“The outlook for U.S. construction starts … has diminished slightly in the short term,” says chief economist Alex Carrick. “Prospects for some private sector project initiations (e.g., in retail) have stalled, while high hopes for an early launch of a much-needed super-infrastructure program, to be sponsored, promoted and perhaps largely financed by the new administration in Washington, have been deflated.”
The forecast, which combines ConstructConnect’s proprietary data with macroeconomic factors and Oxford Economics econometric expertise, shows banner years from starts in the following type-of-structure sub-categories: Hotels/motels (+38.2 percent); warehouses (+16.3 percent); sports stadiums (+47.3 percent); and courthouses (+110 percent).
The 2017 forecast for nonresidential building starts was adjusted to -0.8 percent year-over-year, versus a flat performance that was expected in quarter two’s forecast report. According to the forecast, nonresidential building starts in 2018 will rebound with a 3.3-percent increase, with private office buildings and industrial/manufacturing improving, as well as less downward drag from retail and medical projects. However, the boom in hotel/motel work will begin to slow down.
The report states among major sub-sectors, residential construction’s 2017 year-over-year increase has been scaled down to +4.8 percent from +8.1 percent.
“The robust multifamily market of the last several years has been pulling back of late, as rental rates in many regions soared,” according to ConstructConnect. “Single-family starts also stalled, despite a need for substantial growth activity, since they declined so horrendously in the Great Recession. Also, new family formations, specifically among millennials, point to a tremendous potential that for the moment is not being realized.”