Heather Jones, Construction Economist for FMI Corporation, shared some of the data from FMI’s most recent construction forecast with Roofing Contractor and ARW as part of our State of the Industry report.
Heather Jones, Construction Economist
for FMI Corporation, shared some of the data from FMI’s most recent construction
forecast with Roofing Contractor and ARW as part of our State of the Industry
“The outlook for put in place construction for 2010 remains
bleak,” Jones said. “Total construction in 2010 will be down 4 percent after
declining 13 percent in 2009. While 2009 was likely the bottom in terms of
percent decline, 2010 will be the bottom in terms of dollar volume. Residential
construction is expected to begin recovering in 2010. Nonresidential
construction will decline 15 percent in 2010 after declining 10 percent in
2009. Non-building construction will continue to be a positive contributor,
increasing another 5 percent in 2010, driven mostly by conservation and
development construction. The residential sector is expected to begin to
recover in 2010. Single-family put in place construction will recover at a
slower rate than single family housing starts. The number of square feet per
start is declining, meaning that new homes are getting smaller. They are also
getting less expensive. The average and median new home sale price is
decreasing. The first time home buyer credit and recessionary environment were
contributing factors to this decrease. Multi-family construction has been
impacted severely by tight credit and will not recover until credit loosens.
Residential improvements construction is expected to increase slightly in 2010
as consumers make improvements rather than moving up, and the age of the housing
stock requires improvements.
“The nonresidential sector will see another year of
double-digit decline in 2010. Health care, educational and transportation are
the only segments that will remain near flat. These segments are less dependent
on the general economy. Public safety construction will be the only segment
likely to see actual growth. This growth is driven mainly by military
construction. The lodging, office and commercial segments are highly cyclical
and will experience severe declines in 2010. Manufacturing construction, which
has remained strong mostly due to refinery work, will turn down as many of
these mega projects are completed.
“The economy may show some signs of improving, but it is
just the beginning of the downfall for nonresidential construction.
Nonresidential construction typically lags the general economy by about 18
months. Intense competition that has been bringing down prices has been
reported. This is good for owners, but not so good for contractors. Nonbuilding
construction will remain positive for the forecast period with power and
conservation and development leading the sector.”