Starts Forecast to Go Up 6.5 Percent in 2016
After Climbing a Mere 3.7 Percent in 2015
Total residential and nonresidential building starts are forecast to climb 6.5 percent to $560 billion in all of 2016, Construction Market Data Group said in its fourth-quarter 2015 report.
CMD is basing its prediction on factors such as a steadily recovering economy, wage and employment growth, increased state and federal spending on infrastructure projects and an improved investment outlook.
A weak fourth quarter caused total starts to expand a mere 3.7 percent in 2015, CMD said. By category, nonresidential starts dropped 3 percent, but residential activity expanded by 6.3 percent, and engineering/civil construction starts jumped 10.8 percent.
"At an annual growth rate of 3.7 percent compared with 2014's 7.4 percent, the accelerator was eased on total U.S. construction starts in 2015," said Alex Carrick, CMD's chief economist. "The nonresidential building category underperformed, while residential work maintained a steady upward path and engineering starts surged."
Demand for single-family homes will exceed the demand for multifamily homes and drive the performance of residential starts over the next several years, CMD said.
Additionally, industrial starts, which increased greatly in 2014 and 2015, will be blunted by depreciation in the U.S. dollar, Carrick said.
Medical starts are forecast to grow 8.6 percent in 2016, and then average 5 percent annual growth from 2017-2020.