Construction Off 15% in 2008, but Non-Housing Up

New York, NY, Jan. 22, 2009-- U.S. construction starts in December fell 5 percent to a seasonally adjusted annual rate of $427.35 billion from a month earlier.

A drop in residential building outweighed gains in other types of construction, a McGraw-Hill Construction report said.

For all of 2008, total construction starts were off 15 percent to $542.83 billion, after falling 7 percent in 2007, according to the report released on Wednesday.

Excluding residential building, new construction starts for 2008 were up 2 percent, compared with 7 percent in 2007 and 21 percent in 2006.

"The pattern of construction starts revealed a downward trend over the course of 2008, as the extended slide for housing was joined by emerging weakness for commercial building and to a lesser extent public works," Robert Murray, vice president of economic affairs for McGraw-Hill Construction, said in a statement.

For 2009, McGraw-Hill said it expects the recession and the weak financial sector will bring about further declines in housing and commercial building.

"The eroding fiscal position of states and localities poses a constraint for public works, but this could be more than offset by the boost arising from the Obama Administration's stimulus package, which is expected to be passed in mid-February," Murray said.

Nonresidential building in December rose 2 percent from November to an annual rate of $208.73 billion.

For the full year, nonresidential building edged up 1 percent to $237.66 billion, as four oil refinery expansions totaling $14.3 billion help lift manufacturing construction up 53 percent.

A 27 percent decline in store and shopping center construction and 28 percent decline in warehouse construction helped push nonresidential commercial building down by 17 percent in 2008, the report said.

Residential building in December dropped 11 percent from the prior month to an annual rate of $111.40 billion, as single-family construction fell 9 percent and multifamily housing slid 15 percent.

For 2008, the total for residential building was $162.05 billion, down 39 percent from 2007. Single-family housing dropped 39 percent by dollar volume and 41 percent by number of houses.