US housing starts, a key indicator of demand for residential construction contractors, are projected to rise by double digits in 2016 as compared to 2015, according to the 2016 Dodge Construction Outlook.
Single-family housing starts are forecast to climb an impressive 20% in 2016. Several factors are expected to contribute to production growth in the single-family housing sector, including low mortgage rates, continued employment growth, and pent-up demand.
Analysts underscore employment growth as the housing market’s fundamental driver, citing total US employment that has reached 142 million, up significantly from the previous peak of 138 million in 2008.
Construction on multifamily buildings should remain brisk as well. Multifamily housing starts are projected to increase 7% in 2016. Future growth in this sector is anticipated to come from low vacancies, high rents, and demand for apartments from millennials.
According to a recent Trulia survey, 90% of millennial renters indicated they eventually want to purchase a home — in the ‘burbs rather than in urban areas, as many marketers would expect. While millennials are still establishing new households as renters while they chip away at college debt, the group is about two years away from pulling the trigger on buying a home.
With both single-family and multifamily housing sectors looking promising, residential construction contractors can rely on another facet of home ownership for growth. Residential remodeling is projected to rise about 6% in 2016, according to the National Association of Home Builders.
Industry Impact — Residential construction contractors may need to invest in additional equipment and personnel to meet demand ahead of an anticipated increase in construction starts in 2016.
Tracking the moves of consumer products makers since 2003, Catherine Colbert is a company insights writer and blogger. Before covering companies, she spent ample time in magazine publishing, technical writing, ad copywriting, medical writing, and marketing. Follow her on Twitter.