New construction starts are projected to hit $506bn this year, but the pace of recovery is sluggish.
McGraw Hill Construction’s midyear update to its 2013 Construction Outlook projects a 6% rise in new construction in 2013. That follows an 8% increase in 2012.
Robert A. Murray, McGraw Hill Construction vice president of economic affairs, said construction recovery was slow but steady.
“The recovery for construction continues to unfold in a selective manner, proceeding against the backdrop of the sluggish U.S. economy," Murray said.
“While the degree of uncertainty affecting the economy seems to have eased a bit from last year, tight government financing continues to exert a dampening effect on both the economy and the construction industry. On the positive side for construction, the demand for housing remains strong, market fundamentals for commercial building are strengthening, and lending standards for commercial real estate loans continue to ease gradually. On balance, the recovery for construction is making progress, but at a single-digit pace given the mix of pluses and minuses by major sector.”
Single-family housing starts are expected to rise 28% in dollars, spurred by a low inventory that will sharpen demand for new construction. Recent increases in mortgage rates have not seriously affected affordability for most potential home buyers, according to McGraw Hill.