Dodge Outlook: Starts Will Rise 6% in 2024, Only 2% This Year
Value of construction starts is sparked by boom in manufacturing that started last year, says Dodge Construction Network.
Credit: Photo by Getty Images/schwartstock
Dodge Construction Network expects the total dollar value of construction to rise just 2% in 2023, but is set for a three-fold jump next year, said Sarah Martin, associate director of forecasting, in the group's mid-year industry outlook update on June 15.
Despite persistent inflation and worries surrounding the banking crisis, Dodge forecasts that the U.S. will avoid a technical recession. The strong labor market will allow “the economy to flip into positive territory in the third quarter, and then steadily rise from that point on,” she said.
The dollar value of residential construction is expected to decline 5% in 2023. “Homebuyers continue to be priced out of the market,” said Martin. “But as the Fed pulls back rates in 2024, we are expecting mortgage rates to follow suit and allow the single-family market to return to expansion at that time.”
Dodge forecasts an 11% increase in total residential starts next year.
In the commercial market, starts are expected to drop 5% this year, and an additional 6% in 2024. While the hotel and office sectors are expected to struggle, the “primary driver” for the commercial falloff will be warehouses, following Amazon’s announcement to pull back on new construction.
Manufacturing work is expected to retain most of 2022’s staggering 214% increase, but with just a single digit drop this year. The sector, buoyed by funding from the CHIPS Act and Inflation Reduction Act, "is really a bright spot right now,” said Martin.
Institutional starts are forecast to rise 6% in 2023, according to Dodge, followed by the same increase in 2024.
“Healthcare is one of the biggest opportunities you see right now in the institutional space,” said Martin, citing “strong demand for urgent care and standalone clinics” as well as a need for hospital renovations.
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