We're one full month into 2023 already! Can you believe it?
Hopefully your new year has been productive thus far, and to that end, we'd like to share some of the biggest trends we see shaping the construction industry in the year ahead.
If you're looking for additional analysis, you can read more construction industry 2023 predictions from a panel of experts.
Here are five construction news stories you need to know as we cruise into the New Year.
- Total Construction Starts Are Up
- Construction Jobs and Wages Up
- Housing Economist Warns of Coming Recession
- Best 10 Cities in the US to Buy a New Home
- EPA Seeks Public Input on Green Construction Materials
- New App from Intel Seeks to Unite PCs and Mobile Devices
Total construction starts are up
Construction across the board is riding a five-year high as we cruise into 2023.
According to an analysis by the Dodge Construction Network, December of 2022 saw a 27% upward spike in total construction starts, reaching a seasonally adjusted rate of $1.185 trillion.
This is the first monthly-year-end jump since 2017.
Leading the pack for the month were non-residential building projects, which rose by 51%, and nonbuilding (or infrastructure) starts, which increased by 30%. Residential projects, however, remained comparatively low, with starts rising less than a percentage.
Dodge attributes much of the momentum in non-residential building to the manufacturing sector, which saw a whopping 596% increase in new construction between November and December of 2022, and an overall 185% increase for the entire year. Commercial projects on the other hand were down 10%, partially due to a slowdown in office and hotel projects.
The final month of 2022 was a triumphant capstone to a year that saw 15% higher construction starts compared to the previous year.
“December starts revealed where the current strength in the construction lies: manufacturing and infrastructure,” said Richard Branch, chief economist for Dodge Construction Network. “It is those segments that will provide insulation for the sector as the economy softens in 2023. Recession or not, higher interest rates will weigh on the economy and restrain construction starts in 2023. However, it’s encouraging to know that the new year is starting with a great deal of positive momentum.
Construction jobs and wages up
Construction workers can look forward to new job openings and higher pay as we enter into the new year.
Construction companies added 25,000 jobs and raised average hourly wages by 6.2% in January, outpacing overall job and salary growth in other sectors.
The boost is part of ongoing efforts by industry leaders to meet high construction demand and fill a record-breaking number of vacant positions, according to an analysis by the Associated General Contractors of America.
“Construction firms are doing everything in their power to recruit even more people into the industry,” said AGC CEO Stephen E. Sandherr, “Closing a federal funding gap that puts $5 into college-track programs for every dollar spent on career and technical education will help expose many more workers to high-paying career opportunities in fields like construction.”
A chronic problem for many years, the labor gap is being felt acutely across the entire industry, with 80 percent of contractors revealing in a recent survey of more than 1,000 construction firms that they’re having a difficult time filling vacant positions.
The number of open construction jobs reached a total of 359,000 by the end of 2022, the highest December total ever recorded in the 23-year history of the data.
On the bright side, employment is rising: By the end of 2022, the construction industry employed roughly 7.8 million people, a 3.9% increase from the previous year. Meanwhile, on the salary front, construction workers now earn 18.1% more per hour compared to most other industries.
Housing economist warns of coming recession
Home builders may need to prepare for a tough first half of the new year.
In 2022, single-family home construction fell for the first time in 11 years, dipping by an estimated 12%, according to the National Association of Home Builders. The slowdown may trigger a “mild recession” in the first half of 2023, with a rebound in the latter-half of the year, according to Rob Dietz, NAHB’s chief economist.
Dietz also predicts a decline in multi-family construction, which is coming off a 15% boom in 2022.
“We’ve never had a period where home prices have declined and there has not been a recession,” he said. “I think the rest of the economy will feel it in 2023 via slowing economic output and rising job losses.”
Dietz made his remarks during a press-briefing at the 2023 International Builders’ Show in Las Vegas.
Dietz pointed to continued unaffordability as a prime culprit. While the price of homes has fallen well below the high watermark of 2022’s housing frenzy, inflation and mortgage rates have climbed to the highest they’ve been in years.
The NAHB noted that a difference between a 3% and 6% mortgage rate can add more than $700 per month to the cost of a typical home loan. As a result, the group is predicting a 15% fall in home prices in 2023, a sharp pivot from the 40% gain since the pandemic began.
Best 10 cities in the US to buy a new home
Looking to buy a new house? In this economy? Pro tip: Go south.
An end-of-year report by the National Association of Realtors has highlighted the housing markets that are holding strongest at the outset of 2023. The NAR determined its rankings based on the communities’ affordability of homes, number of renters who can afford to buy a home, job growth, strength of information industry, migration gains, number of teleworkers, population growth, and housing inventory versus housing shortage.
Here are the top 10 place buy a new home, according to NAR:
- Atlanta-Sandy Springs-Marietta, GA
- Median home price: $371,200.
- Raleigh, NC:
- Median home price: $460,500.
- Dallas-Fort Worth-Arlington, TX:
- Median home price: $390,100.
- Fayetteville-Springdale-Rogers, AR-MO:
- Median home price: $328,400.
- Greenville-Anderson-Mauldin, SC
- Median home price: $335,400.
- Charleston-North Charleston, SC:
- Median home price: $416,800.
- Huntsville, AL
- Median home price: $327,500.
- Jacksonville, FL
- Median home price: $398,000.
- San Antonio-New Braunfels, TX
- Median home price: $342,700.
- Knoxville, TN
- Median home price: $331,100.
EPA seeks public input on green construction materials
Builders and members of the public are invited weigh in on federal efforts to decarbonize the construction industry.
The Environmental Protection Agency has announced it will host three webinars and accept written feedback on a series of federal grant and technical assistance programs aimed at helping states, tribal nations, manufacturers, builders, real-estate developers, and other groups become more environmentally friendly.
The input is being sought as part of a $350 million investment from the Inflation Reduction Act (IRA). A landmark piece of federal legislation signed by President Joe Biden last Augusts, the IRA devotes a total of $369 billion toward the development of clean energy and sustainable construction.
One of the main focuses of the EPA webinars will be the need to shift to renewable construction materials.
The built environment is a major contributor to climate change, accounting for roughly 39% of carbon dioxide emissions worldwide. Much of these emissions come from the production of common building materials like steel and concrete, which generate billions of tons of planet warming gasses every year. Combined, these two materials alone are responsible for roughly 16% of humanity’s total CO2 emissions—about six times the amount of carbon produced by the entire aviation industry.
If you’d like to offer your input on the EPA’s efforts to decarbonize the construction industry, you may submit comment in writing or attend one of the following webinars:
1. Reducing Embodied Greenhouse Gas Emissions: Construction Materials Prioritization and Environmental Data Improvement
Date: March 2
Time: 2:00 - 3:30 PM EST
Subject: How can we prioritize construction materials and products and how to improve data on embodied greenhouse gas emissions through measurement, standardization, transparency and reporting criteria.
2. Reducing Embodied Greenhouse Gas Emissions: Grants and Technical Assistance for Environmental Product Declarations
Date: March 22
Time: 2:00 - 3:30 PM EST
Subject: How can new grant and technical assistance programs help businesses calculate and report greenhouse gas emissions data for construction materials and products through Environmental Product Declarations (EPDs)?
3. Reducing Embodied Greenhouse Gas Emissions: Carbon Labeling
Date: April 19
Time: 2:00 - 3:30 PM EST
Subject: How can the EPA develop a carbon labeling program for construction materials and products with substantially lower embodied greenhouse gas emissions?
Written comments should be submitted to docket EPA-HQ-OPPT-2022-0924 on www.regulations.gov
New App from Intel® Seeks to Unite PCs and Mobile Devices
Intel®, the microprocessor chip manufacturer that supplies chips to major computer brands (e.g., Acer®, Lenovo®, HP®, and Dell®) has announced a new app called Unison™ that purports to "Connect your PCs and devices effortlessly."
The app would help solve a major problem, known as Android Device Fragmentation, that has led to major problems (notably: a recent texting debate between Android and Apple).
The new app appears to offer greater integration between Apple® devices and Windows® PCs, as well as Android-based smartphones.