Growth in the residential and civil project sectors is forcing a slowdown, according to Reed Construction Data. However, the value of starts will remain at a high level, especially for nonresidential buildings, but will grow slightly less than construction cost inflation through 2008. However, the 28 percent surge in total construction starts in 2004-2005 will keep construction site activity expanding at least well into 2007.
The value of starts is projected to decline only 2 percent in 2006-2007 in the troubled housing market and then increase 7 percent in 2008. All of the decline will be in the single-family market; multi-family starts will increase 7.7 percent this year and drop only marginally in 2007. This year’s hottest markets, nonresidential building, will continue to be the strongest market next year and again in early 2008.
Although growth in the value of starts is slowing in the summer and fall of 2006 from the 17.8 percent growth pace in the first half of the year, starts will increase 11.8 percent this year and a further 6.7 percent next year. Then, the 4.4 percent forecast increase in 2008 will at best match construction cost increases.