Strong Nonresidential Spending Forecasted
As AIA Predicts 8.3 Percent Growth in 2016
The American Institute of Architects said nonresidential construction spending growth in 2015 "greatly exceeded" its expectations.
It's also predicting "healthy growth" in 2016 as well.
The AIA is forecasting a rate of expansion of 8.3 percent this year, because the level of demand continues to be high for hotels, offices, manufacturing plants and amusement-recreation facilities.
In 2017, overall nonresidential spending should be more subdued, as the AIA expects an increase of 6.7 percent in total nonresidential construction spending.
Of the individual segments that comprise the nonresidential industry, the AIA said the greatest expansion in 2016 will be in hotels (14.8 percent); office spaces (12.8 percent); industrial facilities (11.9 percent); and amusement-recreation (11.2 percent).
Commercial is next highest at 9.9 percent, with retail at 7.5 percent. Institutional facilities should expand at a rate of 6.7 percent, with health care at 6.6 percent, education at 6.5 percent, religious sites at 2.6 percent, and public safety at 1.8 percent.
The AIA's predictions for 2017 call for growth to decline slightly across all segments. For instance, offices will increase at a rate of 8.8 percent, with hotels at 7.8 percent, amusement-recreation at 7.7 percent, commercial at 7.5 percent, institutional at 6.7 percent, and industrial at 5.3 percent.
But health care and education will see their rates of growth go up, as opposed to 2016, by 6.9 percent and 6.6 percent, respectively. Likewise, religious facilities will increase to 4.0 percent, and public safety will climb to 4.2 percent.
Higher Home Prices Expected in Near Term
Home prices are projected to increase 5.2 percent by the fall season of 2016, according to CoreLogic, a leading global data-gathering, property information and analytics services firm.
Including distressed sales, home prices increased by 6.8 percent in October 2015, compared to the same month in 2014, CoreLogic said in its Home Price Index. It also climbed 1.0 percent on a month-over-month basis.
At the same time, CoreLogic's HPI Forecast suggests home prices will increase by 5.2 percent from October 2015 to October 2016. The HPI Forecast is a projection of home prices using CoreLogic's HPI and other data.
"Many markets have experienced a low inventory of homes for sale along with strong buyer demand, which is sustaining upward pressure on home prices," said Dr. Frank Nothaft, chief economist for CoreLogic. "These conditions are likely to persist as we enter 2016."
"The rise in home prices over the past few years has largely been a healthy trend," said Anand Nallathambi, president and CEO of CoreLogic. "The shadow inventory has been reduced significantly and home equity levels are now approaching pre-recession levels."