For one record year in 2004, almost all construction markets showed strong growth and both McGraw-Hill Construction and the U.S. Dept. of Commerce estimate that total industry growth will be up 9% this year. This is far above the flat rate predicted at this time last year, primarily because the single family housing market posted its third year of double-digit growth, defying widespread expectations of a slowdown. At the same time, nonresidential building markets started to rebound with McGraw-Hill Constructions income properties category posting an 11% gain.
The consensus among economists is that the rebound in nonresidential building markets will continue into 2005, with housing finally starting to succumb to rising interest rates. But just how this plays out in different industry forecasts depends on how high interest rates actually go and how sensitive housing is to the increase. The result is fairly widespread in this years batch of forecasts, which range from a 2% increase in total construction predicted by McGraw-Hill Construction to a 6% increase projected by Commerce.