Residential building The 2017 amount for residential build- ing was $302.0 billion, a 2 percent gain that followed a 9 percent increase in 2016. Single-family housing maintained its moderate upward track, rising 8 per- cent, which matched its rate of growth in dollar terms for 2016. By geography, single-family housing in 2017 showed the following pattern for the five major regions: • South Atlantic, up 12 percent; • South Central and West, each up 8 percent; Multifamily housing in 2017 headed in the opposite direction, falling 12 percent after seven straight years of expansion. New York, the nation’s leading multifamily market by dollar volume, registered a relatively modest 4 percent decline in 2017, after sliding a substantial 27 percent in 2016. How- ever, the pullback for multifamily hous- ing broadened on a geographic basis during 2017, as seven of the remaining nine metropolitan markets in the top 10 showed weaker activity, with only San Francisco and Atlanta reporting gains. Rounding out the top 10 multifamily markets by the 2017 dollar volume, with their percent change from 2016, were the following: • Los Angeles, down 17 percent; • Washington, D.C., down 23 percent; • Chicago, down 24 percent; • San Francisco, up 3 percent; • Boston, down 29 percent; • Atlanta, up 26 percent; • Miami, down 50 percent; • Seattle, down 10 percent; and • Dallas-Ft. Worth, down 26 percent. Nonbuilding construction For the full year 2017, nonbuilding con- struction dropped 2 percent to $173.2 billion. The nonbuilding decline was mostly the result of the 35 percent plunge for the electric utility/gas plant category, which continued to retreat after its most recent peak in 2015. Although the dollar amount for conventional power plant • Midwest, up 5 percent; and • Northeast, down 2 percent.
ABI and Consensus Forecast The Architecture Billings Index (ABI) concluded the year in positive terrain, with the December reading capping off three straight months of growth in design billings. The American Institute of Architects (AIA) reported the December ABI score was 52.9, down from a score of 55.0 in the previous month. This score still reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.9, up from a reading of 61.1 the previous month, while the new design contracts index decreased slightly from 53.2 to 52.7. “Overall, 2017 turned out to be a strong year for architecture firms. All but two months saw ABI scores in positive territory,” said AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA. “Additionally, the overall strength of the fourth quarter lays a good foundation for healthy growth in construction activity in 2018.” Key December ABI highlights: • Regional averages: South (56.3); West (53.0); Midwest (52.9); Northeast (49.4) • Sector index breakdown: Multifamily residential (55.4); Commercial/Industrial (54.8); Institutional (51.2); Mixed practice (50.4) The regional and sector categories are calculated as a three-month moving average, whereas the national index, design contracts, and inquiries are monthly numbers. Consensus forecasts Despite labor shortages and rising material costs that continue to impact the construction sector, construction spending for nonresidential buildings is projected to increase 4 percent this year and continue at that pace of growth through 2019. The AIA semi-annual Consensus Construction Forecast indicates the commercial construction sectors will generate much of the expected gains this year, and by 2019 the industrial and institutional sectors will dominate the projected construction growth: Market Segment 2018 Growth 2019 Growth Overall nonresidential building 4.0% 3.9% Commercial/Industrial 4.4% 2.9% Office space 4.6% 3.0% Retail 4.4% 3.5% Hotels 4.1% 0.8% Industrial facilities 3.3% 5.2% Institutional 3.8% 4.3% Education 4.0% 4.9% Health care facilities 4.0% 4.0% Public safety 3.6% 3.9% Amusement/Recreation 3.3% 2.4% Religious -1.1% 0.9% “Rebuilding after the record-breaking losses from natural disasters last year, the recently enacted tax reform bill, and the prospects of an infrastructure package are expected to provide opportunities for even more robust levels of activity within the industry,” Baker said. “The ABI and other major leading indicators for the industry also point to an upturn in construction activity over the coming year.” Learn more about the AIA’s Consensus Construction Forecast at https://www.aia.org/articles/173086-what-slowdown-pace-of-construction-activity. Source: American Institute of Architects
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