Dive Brief:
- Construction information provider CMD Group’s first-quarter forecast report predicted construction starts will grow by 6.5% in 2016 — down from its fourth-quarter forecast of 8.4% — and total more than $560 billion in the next year, driven by wage and employment growth, an uptick in state and federal spending on infrastructure and an expectation of increased investment in nonresidential construction.
- CMD predicted the demand for single-family homes will surpass demand for multifamily homes and be the driver for residential starts over the next several years. In its last quarterly report, CMD predicted a 15.3% increase in residential starts.
- CMD also noted that fourth-quarter growth was less than expected, which stymied construction activity, resulting in a 2015 construction start increase of 3.7%, down from the 6.8% the research firm predicted in its last report.
Dive Insight:
CMD added that a 3% dip in nonresidential starts in the fourth quarter was offset by a 6.3% rise in residential construction starts and a 10.8% growth in engineering/civil construction starts.
"At an annual growth rate of 3.7% compared with 2014’s 7.4%, the accelerator was eased on total U.S. construction starts in 2015," Alex Carrick, CMD's chief economist, said in a release. "The nonresidential building category underperformed, while residential work maintained a steady upward path and engineering starts surged."
Other key forecasts from CMD’s Q1 2016 report are:
- Industrial starts, which saw significant growth in 2014 and 2015, will see some slowdown due to depreciation in the U.S. dollar.
- Medical starts, which shot up 8.6% in 2016, will settle at an approximate 5% annual growth from 2017 to 2020 as the population continues to age.
Carrick said starts this year "will pick up the pace," largely due to improving job and income conditions, as well as stronger demand in the residential sector, and a surge in nonresidential building. However, he added the engineering/civil sector will likely "slow down after such a strong prior year."
CMD’s fourth-quarter prediction of a slowdown in the engineering/civil category was influenced by the inability of Congress at the time to pass a long-term federal highway bill. Since then, Congress passed a $305 billion highway bill, and the Federal Highway Administration announced an "orphan" $2.1 billion that will soon be divvied up among states to use toward additional infrastructure projects.
