Things are beginning to look a bit bullish for construction and that’s no doubt good news for many. According to Fitch Ratings, last month’s strong, single family housing starts, and an unexpected jump in multifamily starts, are clear signals that 2013 should begin strongly for U.S. housing.
“Most housing macros continue to grow, helped by favorable affordability and buyer psychology,” said Managing Director Robert Curran. “The major public builders are pacing the industry as reflected in their net orders and backlog.”
Still, Fitch expects the rate of growth to moderate as 2013 wears on and envisions housing growth to be somewhat less robust this year. The company projects 2013 single family-starts to expand 18%, new home sales to advance 22% and existing home sales increasing by 7%.
But housing may just be the tip of the proverbial iceburg as the Architectural Billings Index has been in positive territory for the four months ending in November. In fact, the American Institute of Architect’s chief economist called the news “the strongest business conditions we have seen since the end of 2007.” Add to that the twin assessments by Research and Markets that the global construction materials market is expected to expand at a combined annual growth rate of 8.9% through 2016, and the US cement industry should grow at an annual rate of 10.8% in the same time, and you have perhaps more optimism than the average construction person can stand.
There does however appear to be a wide margin between places with immediately bright construction futures and those with more of the same. For example, BidClerk reported Atlanta felt a -10.3% year-over-year decrease in construction spending in 2012 while California saw an increase of almost 21%. There was a 14.5% year-over-year increase in 2012 construction spending in the metro Washington DC area, but an almost 22% decline in NYC.
You can also expect the usual suspects to perhaps rise up and put a damper on things, but until that happens it looks like you better start sharpening those estimating pencils.
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