Following a 19.7% surge in spending for commercial, institutional, and industrial buildings in 2023, leading construction industry economists expect spending growth to come back to earth in 2024, according to the July 2023 AIA Consensus Construction Forecast Panel.
The twice-yearly Consensus Construction report aggregates building construction spending forecasts from nine leading economists:
- Richard Branch, Dodge Construction Network
- Scott Hazelton, S&P Global
- Steven Shields, Moody's Analytics
- Brian Strawberry, FMI
- Alex Carrick, ConstructConnect
- Anirban Basu, Associated Builders and Contractors
- Charles Dougherty, Wells Fargo Securities
- Bernard Markstein, Markstein Advisors
- Mark Vitner, Piedmont Crescent Capital
All nine economists are in agreement on a 2024 spending-growth slowdown. Two economists are calling for a contraction in spending (Wells Fargo, -1.0%; Piedmont Crescent Capital, -4.7%). ABC's Anirban Basu is the most bullish on 2024, predicting a 7.7% increase in overall building spending.
"The first half of this year has seen gains in construction spending on nonresidential buildings approaching 20%. However, this scorching growth rate is expected to moderate a bit moving into the third and fourth quarters," wrote AIA Chief Economist Kermit Baker, Hon. AIA, in the report. "Even with the easing in supply chain issues and the improved pricing of many construction materials and products, elevated interest rates, more restrictive lending on the part of banks, nervousness over the direction of the economy, and construction labor constraints are expected to slow the pace of growth."
Bright spots for the remainder of 2023 and 2024 include:
- Healthcare, driven by the aging baby boom population
- Manufacturing/distribution, thanks to the post-Covid reshoring of production resulting from supply chain issues during the pandemic
- Hotels, with leisure travel returning to normal following the pandemic
- Education, as school districts and higher education institutions play catch-up on projects in the wake of Covid.
"There are emerging concerns that outsourcing the manufacturing of high-tech products leaves our economy and national defense more vulnerable," Baker wrote. "The $280 billion in funding provided by the 2022 federal CHIPS and Science Act is designed to advance domestic research and manufacturing of semiconductors in the United States. These funds will boost spending for these facilities for much of the coming decade."
View the full AIA Consensus Construction Forecast Panel report, including an interactive table with market forecasts from all nine economists.
![July 2023 AIA Consensus Construction Forecast Panel](/sites/default/files/inline-images/Screenshot%202023-07-24%20at%201.09.25%20PM_0.png)
Related Stories
Market Data | Dec 15, 2021
Widespread steep increases in materials costs in November outrun prices for construction projects
Construction officials say efforts to address supply chain challenges have been insufficient.
Market Data | Dec 15, 2021
Demand for design services continues to grow
Changing conditions could be on the horizon.
Market Data | Dec 5, 2021
Construction adds 31,000 jobs in November
Gains were in all segments, but the industry will need even more workers as demand accelerates.
Market Data | Dec 5, 2021
Construction spending rebounds in October
Growth in most public and private nonresidential types is offsetting the decline in residential work.
Market Data | Dec 5, 2021
Nonresidential construction spending increases nearly 1% in October
Spending was up on a monthly basis in 13 of the 16 nonresidential subcategories.
Market Data | Nov 30, 2021
Two-thirds of metro areas add construction jobs from October 2020 to October 2021
The pandemic and supply chain woes may limit gains.
Market Data | Nov 22, 2021
Only 16 states and D.C. added construction jobs since the pandemic began
Texas, Wyoming have worst job losses since February 2020, while Utah, South Dakota add the most.
Market Data | Nov 10, 2021
Construction input prices see largest monthly increase since June
Construction input prices are 21.1% higher than in October 2020.
Market Data | Nov 9, 2021
Continued increases in construction materials prices starting to drive up price of construction projects
Supply chain and labor woes continue.
Market Data | Nov 5, 2021
Construction firms add 44,000 jobs in October
Gain occurs even as firms struggle with supply chain challenges.