Despite the public sector dragging down construction growth, economists believe the construction recovery is approaching as they offer optimistic forecasts for 2014, according to ENR.com.
McGraw Hill Construction, a division of The McGraw Hill Cos., New York, recently released its 2014 Dodge Construction Outlook, which predicts that construction starts in 2014 will rise 9 percent to $555 billion. This follows the 5 percent increase estimated for 2013.
Expectations released in the 2014 Dodge Construction Outlook include single-family housing climbing 26 percent in dollars and 24 percent in the number of units; multifamily housing increasing 11 percent in dollars and 9 percent in units; commercial buildings increasing 17 percent in dollars; institutional buildings increasing 2 percent in dollars following a three-year decline; public works construction falling 5 percent; and electric utility construction dropping 33 percent.
"Our outlook is positive, with a few caveats," says Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "This is another step on the way to a more full-fledged expansion. Because this is a measured expansion, there is a very good chance this forecast will play out."
Murray also predicts educational buildings will swing from a negative 3.4 percent in 2013 to a positive 3 percent in 2014, and health care buildings will swing from a negative 2.8 percent to a positive 2 percent.
Murray says although McGraw-Hill Construction is seeing good growth in the residential and commercial markets and many nonresidential building markets are starting to turn the corner, most still are below peak levels. However, he says a slow and steady recovery can be good.
"The way the recovery is unfolding is beneficial for two reasons: It lessens the chance of another boom-then-bust cycle, and it allows for labor constraints to be not as severe," Murray says.
The National Association of Home Builders (NAHB) estimates that total housing starts increased 18 percent to 924,000 in 2013; a "normal" market reportedly would be about 1.3 million housing starts per year. NAHB predicts the market will approach "normal" in 2014 with 1.15 million starts.
This Web exclusive information is a supplement to The long road to recovery.