free e-newsletter free e-newsletter
product info
for premium web access

Construction Slide Could Continue in 2008

October 25, 2007

by Bruce Buckley

An overall decline in construction starts in the United States could prove more dire than originally thought. McGraw-Hill Construction, RECORD’s corporate affiliate, estimates that the industry experienced an 8 percent decline in construction starts in 2007 and it forecasts another 2 percent drop in 2008. This forecast was released today during McGraw-Hill Construction’s 2008 Construction Outlook conference in Washington, D.C.

After reaching a record $668.9 billion in total construction starts in 2006, values are expected to hit $626.7 billion for 2007 and $614.1 billion in 2008. Last year, McGraw-Hill Construction predicted that starts in 2007 would drop 1 percent, as the single-family housing market weakened and other sectors, such as institutional work, remained strong.

Robert A. Murray, vice president of economic affairs at McGraw-Hill Construction, said the turmoil in the sub-prime mortgage market that emerged in August has created a major concern for the construction industry and the overall economy. He added that tightening lending conditions will impact development in both residential and commercial real estate: “As a result, we’re now predicting downturns in the previously resilient multifamily and commercial segments, as well as continued weakness in single-family home construction.”

Single-family residential construction remains the main drag on overall construction starts, with a 25 percent plunge estimated in 2007. Declines will continue in 2008 but could ease considerably with dollar volume expected to decline an additional 3 percent, according to the report. Multifamily housing is also expected to slide 8 percent in 2008, to $56.4 billion, after a nearly 12 percent drop in 2007.

Faced with tightening lending standards, commercial buildings will take a hit as well, dropping 6 percent in 2008. After experiencing a 40 percent surge of growth in 2007, thanks in part to considerable development of ethanol plants, the manufacturing sector will retreat by 11 percent in dollar volume to $16.5 billion.

Rate this project:
Based on what you have seen and read about this project, how would you grade it? Use the stars below to indicate your assessment, five stars being the highest rating.
----- Advertising -----

Some trends are more positive for 2007, particularly in the public sector as many state and local governments remain fiscally strong, Murray said. Public works could realize a 3 percent gain to $120.95 billion in 2008. Highways and bridges are predicted to be a major contributor to growth, as renewed interest has been expressed in Congress for infrastructure improvements following the I-35W bridge collapse in Minneapolis in August. Public-private partnerships also continue to offer additional revenue sources. Murray said that the sector could see a 5 percent increase in construction starts to $56.9 billion in 2008.

Values of institutional building will also rise 4 percent to $118.7 billion next year, while square footage of those projects will remain essentially flat, experiencing a modest 1 percent increase. School construction will be a strong contributor to growth in the sector, rising 7 percent to $56.3 billion next year, while healthcare starts will flatten with a 1 percent drop predicted.

A version of this story first appeared on, the Web site of McGraw-Hill Construction’s Engineering News-Record.

share: more »

 Reader Comments:

Sign in to Comment

To write a comment about this story, please sign in. If this is your first time commenting on this site, you will be required to fill out a brief registration form. Your public username will be the beginning of the email address that you enter into the form (everything before the @ symbol). Other than that, none of the information that you enter will be publically displayed.

We welcome comments from all points of view. Off-topic or abusive comments, however, will be removed at the editors’ discretion.

----- Advertising -----
----- Advertising -----
Sweets, Search Building Products
Reader Feedback
Most Commented Most Recommended
Rankings reflect comments made in the past 14 days
Rankings reflect comments made in the past 14 days