While the value of new construction starts in December 2001 dropped 1 percent to a seasonally adjusted annual rate of $479.9 billion, for all of 2001, total construction advanced 3 percent to $485.2 billion, marking the 10th straight year of expansion, according to F.W. Dodge, a division of The McGraw-Hill Cos.' Construction Information Group.
"The construction industry slipped back during the first half of 2001, but then proved to be one of the more resilient sectors of the economy as the year progressed," stated Robert A. Murray, vice president of economic affairs for F.W. Dodge. "Single-family housing had a very strong 2001, helped by low mortgage rates, and school construction reached a new record high. Public works construction maintained its strengthening trend of recent years, and electric power plant construction continued to surge."
For the full year 2001, nonresidential building was down 4 percent to $165.8 billion. The largest declines were reported for offices, down 22 percent; hotels, down 21 percent; and warehouses, down 15 percent.
"After a very strong 2000, the demand for office space was dampened by the dot-com correction, as a substantial amount of sublease space was put back on the market," noted Murray. "The decline for office construction was especially pronounced in those cities that benefited from the high-tech boom, such as Washington, D.C.; Seattle; San Jose and Dallas." Stores and shopping centers in 2001 posted a comparatively moderate decline of 9 percent, with the downward trend cushioned by greater construction activity from the more successful retail chains.
Most of the institutional categories witnessed growth during 2001. School construction advanced 16 percent, surpassing the previous record volume that had been achieved in 2000.
For all of 2001, residential building grew 4 percent to $215.9 billion, the result of a 5 percent gain for single-family housing combined with a 2 percent decline for multifamily housing. "The single family housing market was clearly one of the bright spots for the economy during 2001 - construction activity was up, while sales of both new and existing homes achieved new highs," stated Murray.
"Homebuyer demand was supported by the low cost of financing, as the 30-year fixed mortgage rate moved down to 6.5 percent during the fall, before returning to 7 percent by year's end. Single-family housing in 2002 should stay reasonably healthy, but some dampening may take place in the near term given continued weakness for employment."