New York, Oct. 23-- The robust single-family housing market should help to keep total construction activity in the U.S. from falling in 2003, as home building offsets declines in construction of everything from office buildings and schools to power plants, according to a new report.
The Wall Street Journal reported that total construction activity in the U.S. is expected to grow by 1% in 2003 from a year earlier, according to McGraw-Hill Construction, a division of McGraw-Hill Cos.
"Single-family housing has been growing at a blistering pace over the past two years, providing an upward push in construction for 2003," said Robert Murray, chief economist at McGraw-Hill Construction. Mr. Murray is expected to deliver his annual forecast to construction-industry leaders at a conference today in Washington hosted by McGraw-Hill Construction.
The total value of construction starts is expected to be $505.6 billion in 2003, up from $501.7 billion in 2002. This year would be the second in a row of 1% growth and more or less reflects the state of the economy. Construction activity grew at an average of 10% annually from 1996 to 1999.
McGraw-Hill Construction expects the total value of construction starts to rise about 1% in 2004, to $508.9 billion, but this time largely on the strength of an expected uptick in construction of commercial real estate, particularly hotels and stores, while housing declines.
The value of single-family home construction is expected to fall 2% in 2004, after an 8% rise in 2003, as the economy continues to improve, prompting interest and mortgage rates to rise, says the report.
Single-family housing construction starts are expected to drop 5% in 2004 to 1.29 million units from an expected 1.36 million units in 2003. In dollar terms, construction would fall to $226 billion in 2004 from an expected $230.5 billion in 2003.
Construction of commercial properties is expected to climb 9% in dollar volume and 5% in square footage in 2004, after remaining flat in both categories in 2003. McGraw-Hill Construction said hotels and warehouses should see double-digit growth, while the upturn for offices should be more modest, since any hiring that occurs next year is expected to be gradual.
Construction of public-works projects and manufacturing buildings is expected to rise in 2004, while construction of electric utilities and institutional buildings is expected to fall, the report said.
