Housing Construction Starts to Ramp Up in 2010, McGraw Hill Predicts

The level of construction starts in 2010 will climb 11 percent to $466.2 billion, following the 25-percent decline predicted for 2009, according to McGraw Hill Construction’s 2010 Construction Outlook released last week.

“The U.S. construction market in 2010 will be helped by growth for several sectors, following three straight years of decline that brought total construction activity down 39 percent from its mid-decade peak,” said Robert Murray, vice president of economic affairs for McGraw Hill Construction at the Outlook 2010 Executive Conference in Washington. “The benefits from the stimulus act will broaden in scope, lifting not just highway construction but also environmental public works and several institutional structure types. With continued improvement expected for single-family housing, after reaching bottom earlier this year, the overall level of construction activity should see moderate expansion in 2010.”

Highlights of the 2010 Construction Outlook include:
• Single-family housing for 2010 will advance 32 percent in dollars, corresponding to a 30-percent increase in the number of units to 560,000;
• Multi-family housing will improve 16 percent in dollars and 14 percent in units, after steep reductions in 2008 and 2009;
• Commercial buildings will drop 4 percent in dollars, following a steep 43-percent decline in 2009. The weak employment picture will further depress occupancies, making it even more difficult to justify new construction;
• Institutional buildings will begin to stabilize after losing momentum in 2009. Square footage will retreat another 2 percent after dropping 23 percent this year. The dollar amount of construction for this sector will increase 1 percent, helped by energy-efficiency upgrades to federal buildings and continued strength for military buildings;
• Manufacturing buildings will drop 14 percent in dollars and 3 percent in square feet, hampered by the substantial amount of slack manufacturing capacity;
• Public works construction will rise 14 percent, with more wide-ranging strength across all project types;
• Electric utility construction will drop 3 percent, continuing to drop after a record high in 2008.

While stimulus funds are likely to have a greater effect in 2010, industry leaders cautioned against placing too high expectations on them. “The stimulus funds are meant to be just that, a stimulus, not the be-all-end-all answer to infrastructure financing,” said Frank Guinta, senior vice president and managing director of Hill International. “Both public and private sectors need to be innovative and rewrite the rules of project finance to address tremendous construction needs with minimal financing options.”

For more information on the 2010 Construction Outlook, visit

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