When the economic downturn struck US a few years back, the construction industry was one of the major industries that witnessed serious setbacks. But recent studies reveal that this industry is poised for a growth of about 9% this year. This is higher than the 5% growth that happened during 2013.
Industry experts also opine that there will be measured expansion in the industry during 2014. It is true that there are still uncertain signs in the economy and there are cutbacks in the federal spending but there are a number of positive factors also that are likely to influence and benefit the construction industry. Added to this are the encouraging signs on the job front but we cannot say that the employment market has completely come out of its sluggishness.
Interest rates continue to remain low and the Federal Reserve is expected to continue with their efforts and necessary steps for keeping the interest rates low. Similarly, lending by banks has started picking up and this is quite visible both by the lending standards and also the volume of the loans that are being disbursed. Though federal funding has decreased, the discipline with which states are managing their funds is likely to offset this.
The five things to know about the growth of the construction industry in the US are elaborated here.
Experts predict that this sector will witness a growth of about 26% in dollar terms. This is against the 24% growth in the previous year. In fact, according to these experts, the positives that are likely to influence this sector are many. Some of them are the number of foreclosures is coming down, the prices of homes are rising and the mortgage rates continue to remain low. Banks seem to have learned their lessons and so, they are adopting careful practices while lending. Though this is not a deterrent, this may restrain some of the unscrupulous borrowers.
This sector will also witness about 11% increase in growth in terms of dollars and about 9% in terms of the number of units. Though the growth is expected to continue, gains in percentage are expected to be smaller than what they were during the last four years. Experts opine that this is a sign of maturity in this segment. The finance community that focuses mainly on the real estate sector considers this as a favorite investment sector. This means that in almost all the major cities, more number of high-rise buildings for multifamily housing will be coming up.
Experts predict that there will be a 17% growth in this segment as against what was seen in 2013. Warehouses, hotels and similar sectors will be the leading areas in this segment. Other areas that are likely to grow are stores, office buildings, etc. Since the market fundamentals are improving and banks have started lending on a larger scale for commercial development, the commercial building segment will grow at a faster pace but the growth will still be less than that of 2007 which was at a peak level of 28%.
There had been a decline in this sector during the last five years but there will be a turn-around in 2014. Though the growth forecast will be just 2%, the very fact that there will be a turn-around is encouraging. Educational institutions are chalking out plans for capital expansion. But growth will be flat in healthcare construction.
Construction In Sectors Like Public Works And Electrical Utility
There will be a drop of 5% in the construction activities in the Public Works sector and as far as construction activities in the electrical utility sector is concerned, there will be a retreat of 33%. According to experts, transmission line activities will continue to remain strong because the need ifor these activities continues to be huge.
To summarize, single-family housing will lead the growth in 2014 in the construction industry in US.