Over the past 12 months, changes in total construction starts have been essentially flat and will remain that way through the first quarter of 2024, according to Richard Branch, Dodge Construction Network chief economist.
Differences in construction starts, however, are more pronounced when looking at individual market segments.
Nonbuilding starts were 22% higher, and nonresidential building starts gained 3%. Conversely, on a 12-month rolling basis, residential starts posted a 16% decline.
“It's really interesting to see this bifurcation in the market,” Branch said, noting that publicly funded projects like infrastructure, manufacturing, education, and healthcare are doing reasonably well. “It's that private side of the market, whether that's residential or the income property types like office and warehouse, that are doing especially weak over the last 12 months.”
In the current economic climate, interest rates remain high, and Branch forecasts that will likely remain the case until at least the summer of 2024 when he believes the Federal Reserve will start to cut rates.
“Credit standards continue to be tight and there are of course a lot of externalities facing the construction market,” he said.
