U.S. construction starts are expected to increase in the new year, heading up 9 percent in 2014 to $555.3 billion—a 5 percent increase over what’s estimated for this year, according to McGraw Hill Construction’s 2014 forecast. 

A big contributor to that growth will be from single-family home construction, the report notes. Single-family housing construction is expected to grow 26 percent, to 785,000 units.

“The positives for single-family housing are numerous—the pace of foreclosures has eased, home prices are rising, and mortgage rates remain near recent lows,” McGraw Hill Construction notes in its report. “However, the demand for housing will continue to be restrained by careful bank lending practices toward issuing mortgages.”

Multifamily housing is expected to rise 11 percent in dollars and 9 percent in units in 2014, according to the report. The percentage gains are expected to be smaller than the previous four years. However, multifamily housing is still a lure for investors, which will help lead to more high-rise residential buildings in major cities, the report notes.

Commercial buildings also are expected to tick up 17 percent, faster than the 15 percent gain that is predicted for this year. “Both warehouses and hotels will continue to lead the way, while stores and office buildings pick up the pace,” the report notes. Improving market fundatmentals and more bank lending will aid commercial development. Still, commercial building is projected to be 28 percent below the 2007 peak.

“The 2014 picture bears some similarity to what’s taking place during 2013, with single family housing providing much of the upward push; multifamily housing showing a slower yet still healthy rate of growth after four years of expansion, and commercial building gradually ascending from low levels,” says Robert Murray, McGraw Hill Construction’s vice president of Economic Affairs. 

—REALTOR® Magazine Daily News