McGraw Hill Construction last week forecasted a 7-percent decline in construction starts in 2009 to $515 billion, following a 12-percent decline predicted for 2008. The information, which predicts a continued tough funding environment, is part of the company’s 2009 Construction Outlook.
“The speed and scope of the events in September and October were startling,” said Robert Murray, vice president of economic affairs for MHC. “Tighter lending standards are a major constraint for the construction industry. For single-family housing, declines are continuing and showing no signs of an upturn. Home prices are continuing to drop, a 20-percent drop so far this year, and we expect another 10-percent decline through the first half of 2009. Then things should level off. Store construction has taken the biggest hit; we’re looking at a 30-percent decline in retail-square-footage starts this year.”
Other major points include:
• Single family housing for 2009 will drop 2 percent in dollars, with a 4-percent drop in the number of units to 560,000;
• Multi-family housing will decline 6 percent in dollars and 8 percent in units;
• Commercial buildings will drop 12 percent in dollars and 15 percent in square feet, similar to 2008 declines. Stores and warehouses will lose momentum, the office correction will be steeper and hotel construction will slow;
• Institutional buildings will decrease 3 percent in dollars and 6 percent in square feet;
• Manufacturing buildings will drop 32 percent in dollars, public works construction will descend 5 percent, and electric utility construction will plunge 30 percent in 2009 after a 55-percent leap in 2008.