BuildingTeam Construction Forecast

Construction Forecasts

Overview of Canadian Construction Markets
11/6/2007 12:48:00 PM - The level of housing starts in Canada has seriously diverged from the level of housing starts in the U.S. The justifications for the ongoing exceptional levels of starts in Canada are not there. Commercial construction is currently about as strong as it can get. Industrial construction based on resources will remain strong as long as world growth keeps chugging along. Finally, institutional markets and a number of engineering construction categories will continue to benefit from strong government finances.

U.S. Warehouse Construction Steady at a High Level
10/29/2007 9:14:00 AM - The warehouse construction market in the U.S. is steady at a high level. New supply is keeping pace with demand for new space and, therefore, rental rates are rising at a 3.5% pace, slightly faster than overall inflation. The national vacancy rate is steady at just over the 8.5% long-term average. Warehouse construction spending, after inflation, will be steady to slightly higher in the next two years and will be concentrated in a small number of major distribution centers and in population centers.

Public Construction Boom Set to Ebb
10/29/2007 8:02:00 AM - Four years of accelerating growth in public construction spending is terminating at the end of 2007, at the same time that the steep two-year plunge (due to weak residential markets) in private construction spending is reversing. The precipitating event in the public sector is the cautious state and local government budgets for the 2007-08 fiscal year. The growth of public construction spending will peak at 12.2% in the 2007 calendar year, slip to 8.2% in 2008 and slip further to 7.3% in 2009.

Financial Environment for Construction Improves Again in October
10/22/2007 6:22:00 AM - The financial environment for construction improved further over the last month. Prime, conforming mortgage rates were steady for adjustable rate loans and down 20 basis points (100 basis points = 1.0%) for fixed-rate loans. The risk premiums in other mortgage rates — subprime fixed, subprime adjustable, jumbo and commercial — declined measurably, but remained above the June pre-mortgage crisis level. For the broader economy, the credit risk problem has also lessened significantly.

The Shrinking U.S. Dollar is a Risk for Construction Demand
10/19/2007 11:58:00 AM - The nearly six-year decline in the value of the U.S. dollar at a 3% to 5% annual pace quickened in the last few months, following the flight of foreign capital concerned about the value of securities backed by U.S. property and the 0.5 percentage point cut in U.S. short-term interest rates. The full consequences on the U.S. economy and construction markets are yet to be felt. The dollar steadied in the past month, but the damage already done has not been reversed and is not likely to be reversed soon.

Total U.S. Construction Spending -1.7% in 2007 and +7.1% in 2008
10/17/2007 5:32:00 AM - The Reed Construction Data forecast is for a 7.1% increase in construction spending in 2008 (versus -1.7% in 2007). The gains will be small early in the year, but progressively increase. There is a larger-than-usual error range about this forecast since the forecast period includes a projected turnabout from decline to increase. The timing and magnitude of the turnabout depends on housing start trends.

U.S. Construction Forecast Tables — Issued October 2007
10/17/2007 5:23:00 AM - Based on job-site activity levels through August 2007, Reed Construction Data (RCD) now expects total U.S. construction spending to be down -1.7% in 2007 versus +5.3% last year. Total residential investment will decline -4.5% in 2007 as housing starts will fall -21.2% this year. Non-residential building put-in-place investment is now expected to increase +16.6% in 2007 while non-building (heavy engineering) work will grow +11.5%. RCD's outlook for 2008 total construction spending now stands at +7.1%.

Nearly 100 Million Square Feet of New Construction now expected in 2007
9/12/2007 5:24:00 AM - CanaData has significantly increased its forecast of total Canada non-residential building construction starts in 2007 to 99.0 million from 89.5 million in its previous forecast. By comparison, the 2006 level was 78.4 million. This is the "high point" for non-residential building starts in this cycle. Next year, total starts are forecast to moderate somewhat to 89.0 million square feet.

Financial Turmoil Ends With Little Impact on Broader Economy
9/12/2007 5:20:00 AM - The turmoil in financial markets has now settled, with market interest rates clearly lower. Most of this decline has not passed through to mortgage rates because of the higher default risk now perceived for all mortgages. Both market and mortgage rates have already priced in the expected cut in the federal funds rate from 5.25% to 5.00% on September 18th. Therefore, the broad economic fallout will be confined to a reduction in consumer spending by the households directly affected by the mortgage crisis.

U.S. Construction Forecast Tables – Issued September 2007 – Total Spending -1.0% in 2007 and +8.3% in 2008
9/12/2007 4:55:00 AM - Reed Construction Data is now forecasting total U.S. construction spending to be down -1.0% in 2007 versus +5.3% last year. Total residential investment (new and improvements) will decline -14.4% in 2007 (versus a flat figure of +0.1% in 2006) as housing starts will fall -20.3% this year (versus -12.9% last year). Non-residential building put-in-place investment is now expected to increase +16.6% in 2007 and non-building (heavy engineering) work will grow +12.4%.

Next >>

RCD Tool Center
RCD Links
Project Information
Building Product Info
Regional Publications
Other Products
Please visit these other Reed Business sites