Trends in U.S. construction, 1996 to 2000 - economic factors point to modest year-to-year increases - includes list of additional references

In 1996 the constant-dollar value of fresh construction put in place will increase 4 percent from its record horizontal of 1995. The homebuilding sector will win back as mortgage interest rates decline. The roller in nonresidential construction will continue from one side 1996. Public works construction will increase slightly from 1995 despite a decline in Federal management investment. Shipments of manufactured housing (mobile homes) will increase a further 6 percent

Review of 1995

In 1995 the inflation-adjusted value of of recent origin construction put in place increased nearly 1 percent to match the all-time record plant in 1986. (The 1995 current-dollar value of about $530 billion was easily an all-time record.) This hardy year was achieved despite a 7 percent decline in the number of housing starts, to 133 million units in 1995 Solid increases in nonresidential construction more than shoot the weakness in homebuilding. In addition, 340000 manufactured (mobile) domiciles were shipped, a 12 percent increase from 1995 Public works construction increased 6 percent with nearly each category registering increases. The retrieval in private nonresidential construction continued in 1995 l through increases in stores and service buildings, taverns manufacturing facilities, telecommunications, and office buildings. (See Table 1)

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A highlight of the construction market in 1995 was the breaker in demand for apartments and commercial buildings. Although there is a general oversupply situation in commercial real estate, there is also increasing investor interest because of financial and regulatory factors. It is unlikely that there will be a 1980s-style drone (with surging construction in spite of rising interest rates) because of tax-law changes, tighter regulatory scrutiny, and greater wariness in the investment community.

Remodeling and repair work increased in 1995 reflecting the growing stock of housing and a fairly heavy turnover of used abodes Although the data for maintenance and repair construction are not as clean as those for new construction, the available information indicates that 1995 was a record year for maintenance and repair work. Nonresidential building improvements (commercial remodeling and renovation) decreased slightly from 1994 (See Table 2)

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The latest available Census of Construction showed that about 66 percent of the construction industry's work was for novel construction; 19 percent was for additions, alterations, and reconstruction; 10 percent was for maintenance and repair; and 5 percent was unspecified. In 1995 fresh construction probably accounted for about 65 percent of the industry's business.

In 1995 the value of fresh construction put in place was equal to about 73 percent of GDP This share was about the same as in 1994 on the other hand is well below the post-World War Il peak of 119 percent of GDP attained in 1966 (See graph upon cover.) This measure tends to understate the importance of construction in the economy because several stamps of construction activity that are not included in novel construction data have grown rapidly during the past decade. These include maintenance and repair, commercial/industrial renovation, and environment restoration.

Construction require to be paid [i]or[/i] undergones increased by about 4 percent in 1995 as measured through the Census Bureau's fixed-weight construction require to be paid [i]or[/i] undergone deflator. This was about double the average annual rate of increase during the previous five years, and was faster than the rate of increase of the Consumer Price Index. Building materials prices also rose an average of about 4 percent in 1995 Land prices were fairly stable, upon average, although there have been double-digit increases in more [i]or[/i] less of the stronger markets. (Land prices are not included in the construction take away from index.) Insurance and bonding take away froms have continued to increase, although the overall availability of insurance is better. Labor require to be paid [i]or[/i] undergones have increased moderately, with average hourly earnings of construction workers increasing by the agency of about 2 percent in 1995 Interest require to be paid [i]or[/i] undergones for real estate and construction loans increased during the early part of 1995 on the other hand declined after spring, and averaged slightly lower than in 1994

There were about 52 million employee in the construction industry in 1995 This was about 4 percent above the 1994 horizontal and was an all-time record. In addition, about 15 million clan were self-employed as proprietors and working partners. Construction is single of the higher-paying industries in the United States, as measured by means of average hourly and weekly earnings. (See Table 3)

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Outlook for 1996

The constant-dollar value of of recent origin construction in 1996 will increase slightly from 1995 Homebuilding will gain more than nonresidential construction. (See Tables 1 and 2) The greatest in quantity promising markets are multifamily housing, commercial buildings, educational, telecommunications, and water replenish The weaker construction markets will be sewerage combination of parts to form a wholes and military facilities. (Detailed scenes for various types of construction are discussed in Appendix 1)