ArticlesBuilding and Construction Industry Outlook Q2 2024

Building and Construction Industry Outlook Q2 2024

Download Building and Construction Industry Outlook Q2 2024

Building and Construction Industry Outlook Q2 2024

Residential Optimism, Infrastructure Growth, Nonresidential Deferred Activity

• Housing starts 12 month decline and erosion of housing backlog following interest rate hikes until recent stabilization amid renewed positive builder sentiment
• Stabilizing mortgage rates expected to drive single-family growth while tight lending conditions for development loans causing drop in multifamily starts
• Decline in multi-family starts expected to continue through 2025 while single family starts begin to rebound following an ~6% decline from 2023-2023
• Implications for manufacturers and distributors in 2024 regarding volatility of signals and uncertainty regarding demand
• Remodeling expenditures expected to drop in 2024 due to declining existing home sales as homeowners continue to hold on to low-rate mortgages
• Declines in retail and particularly wholesale building material expenditures illustrate soft renovation and new construction market demand
• Residential input pricing softened since mid-2022 peak while non-residential index has flattened from beginning of 2023
• Growth in nonresidential building expenditures still expected in 2024 and 2025 from the tailwinds of major government initiatives
• AIA indicators and nonresidential building starts trended up through Q4 23 but remain below 2022 results
• All forecast scenarios show an overall increase in $ expenditures over the next 5 years, with nonbuilding construction leading the way with future annual growth between 5% and 7%; nonresidential building spending will moderate after a strong surge in 2023, with continued annual growth over the next 5 years driven by continued funding from IIJA (Infrastructure Investment and Jobs Act); expectations for residential activity in 2024 has softened following pushback of interest rate reductions by the Federal Reserve but is expected to resume growth in 2025

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