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Industry News / Market Forecast

November 6, 2019

Dodge Forecasts 4 Percent Drop in Construction Starts Value in 2020

U.S. construction starts will slip 4 percent in dollar value in 2020 to $776 billion, according to the latest forecast from Dodge Data & Analytics.

“The recovery in construction starts that began during 2010 in the aftermath of the Great Recession is coming to an end,” said Dodge Chief Economist Richard Branch. “Easing economic growth driven by mounting trade tensions and lack of skilled labor will lead to a broad-based but orderly pullback in construction starts in 2020. After increasing 3 percent in 2018, construction starts dipped an estimated 1 percent in 2019, and will fall 4 percent in 2020.”

Branch stressed that the slowdown will not be a repeat of the Great Recession. “Economic growth is slowing but is not anticipated to contract next year,” he said. “Construction starts, therefore, will decline but the level of activity will remain close to recent highs.

Looking at specific market segments:

  • Commercial building starts will fall 6 percent (in dollar value) in 2020, with the steepest declines occurring in commercial warehouses and hotels. A dip in office construction will be buffered by data center construction. Retail construction will continue to fall in 2020.
  • In the manufacturing sector the dollar value of plant construction will slide 2 percent in 2020 following an estimated decline of 29% in 2019. Branch said, “Rising trade tensions have tilted this sector to the downside with recent data, both domestic and globally, suggesting the manufacturing sector is in contraction.”
  • In contrast, public works construction starts will climb 4 percent in 2020. “By and large, recent federal appropriations have kept funding for public works construction either steady or slightly higher” said Branch. “Translating into continued growth in environmental and transportation infrastructure starts.”
  • In the residential sector, the dollar value of single-family housing starts will be down 3 percent in 2020, while multifamily starts will fall 13 percent.

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November 6, 2019



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