Heather Jones, Construction Economist for FMI Corporation, shared some of the data from FMI’s most recent construction forecast withRoofing Contractor andARW as part of our State of the Industry report.

Heather Jones, Construction Economist for FMI Corporation, shared some of the data from FMI’s most recent construction forecast withRoofing ContractorandARW as part of our State of the Industry report.

“The outlook for put in place construction for 2010 remains bleak,” Jones said. “Total construction in 2010 will be down 4 percent after declining 13 percent in 2009. While 2009 was likely the bottom in terms of percent decline, 2010 will be the bottom in terms of dollar volume. Residential construction is expected to begin recovering in 2010. Nonresidential construction will decline 15 percent in 2010 after declining 10 percent in 2009. Non-building construction will continue to be a positive contributor, increasing another 5 percent in 2010, driven mostly by conservation and development construction. The residential sector is expected to begin to recover in 2010. Single-family put in place construction will recover at a slower rate than single family housing starts. The number of square feet per start is declining, meaning that new homes are getting smaller. They are also getting less expensive. The average and median new home sale price is decreasing. The first time home buyer credit and recessionary environment were contributing factors to this decrease. Multi-family construction has been impacted severely by tight credit and will not recover until credit loosens. Residential improvements construction is expected to increase slightly in 2010 as consumers make improvements rather than moving up, and the age of the housing stock requires improvements.

“The nonresidential sector will see another year of double-digit decline in 2010. Health care, educational and transportation are the only segments that will remain near flat. These segments are less dependent on the general economy. Public safety construction will be the only segment likely to see actual growth. This growth is driven mainly by military construction. The lodging, office and commercial segments are highly cyclical and will experience severe declines in 2010. Manufacturing construction, which has remained strong mostly due to refinery work, will turn down as many of these mega projects are completed.

“The economy may show some signs of improving, but it is just the beginning of the downfall for nonresidential construction. Nonresidential construction typically lags the general economy by about 18 months. Intense competition that has been bringing down prices has been reported. This is good for owners, but not so good for contractors. Nonbuilding construction will remain positive for the forecast period with power and conservation and development leading the sector.”