New construction starts are forecast to rise 6% this year to $506 billion, according to a Midyear Update to the “2013 Construction Outlook” from McGraw Hill Construction, a division of McGraw Hill Financial. This is the same rate of increase for total construction starts predicted last October, and follows the 8% gain that took place in 2012.

“The recovery for construction continues to unfold in a selective manner, proceeding against the backdrop of the sluggish U.S. economy,” said Robert A. Murray, vice president of economic affairs for McGraw Hill Construction

Here are the main points by sector for the 2013 construction market:

• Single family housing will advance 28% in dollars, corresponding to a 24% increase in the number of dwelling units to 640,000.  The inventory of new homes for sale is currently very low, which should spur more construction, and home prices are heading upward.

• Multifamily housing will climb 23% in dollars and 20% in units, helped by the gains reported for occupancies and rents over the past year.

• Commercial building will grow 15%, after the 11% increase reported for 2012, although this year’s level of activity in dollar terms will still be 39% less than what was reported during the 2007 peak year. The increase for office construction will remain relatively subdued in 2013, as more privately financed office projects are countered by fewer government office buildings.

• The institutional building market will slide an additional 5%, after falling 10% in 2012.  While state fiscal health has shown some improvement, state and local budgets remain tight, further dampening school construction.

• The manufacturing building category will drop 8%, as firms hold back on plant investment given the sluggish U.S. economy and slow export markets.

• Public works construction will rise 3%, helped by growth for highways and bridges. The transportation sector was largely exempt from the federal spending cutbacks under the sequester, and the current year is seeing a number of large bridge projects reach the construction start stage.

• Electric utilities will see a 40% plunge in the value of new construction starts, following the record high that was achieved in 2012 which included the start of two large nuclear facilities.

“While the degree of uncertainty affecting the economy seems to have eased a bit from last year, tight government financing continues to exert a dampening effect on both the economy and the construction industry,” Murray said. “On the positive side for construction, the demand for housing remains strong, market fundamentals for commercial building are strengthening, and lending standards for commercial real estate loans continue to ease gradually. On balance, the recovery for construction is making progress, but at a single-digit pace given the mix of pluses and minuses by major sector.”