January 2023
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Forecast 2023 Here Comes 2023: What’s the Outlook? CONSTRUCTION PUT IN PLACE (in millions of U.S. dollars) By Richard Friedman The design and construction industry heads into 2023 with a lot of questions. How deep and wide will the decline be in housing? Can the commercial rebound sustain? How will government programs such as the new infrastructure and climate change laws affect the industry? Here’s a glimpse at the outlook for some key markets. Housing
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index stood at a near-recordhigh level of 83 in January 2022, but dropped as the year went on. In November, the index – derived from a survey of NAHB members rating conditions for new single-family home sales – plummeted to 33, its lowest level
in over 10 years. Multifamily properties, on the other hand, have not seen such a drastic decline. The NAHB’s Multifamily Production Index slid noticeably in the third quarter of 2022, but this was largely due to a hit in the for-sale (condo) sector. The Census Bureau’s
figures on permits showed only a minor reduction nationally for multifamily from September to October (the latest figures available), but a year-over-year gain of 11.2%. Fannie Mae predicts that the housing market will bottom out in the second quarter of 2023, with a much
stronger 2024, as mortgage rates and supply both fall. Commercial
Census Bureau data on construction put in place notes that year-over-year figures for commercial markets, office buildings and hospitality all improved. Value for the commercial market, which includes restaurants and retail, rose 22.4% year over year. Lodging was up 16.1%, and office ticked up 0.7%. “Emerging Trends in Real Estate 2023,” a joint publication of PWC and the Urban Land Institute, said “there is a general sense of wary optimism” around the commercial markets. The American Institute of Architects (AIA) Construction Consensus Forecast projects a 13.8% growth rate for hotels, 3.5% for offices and 3.2% for retail and other commercial in 2023. Public-sector
Public-sector projects will benefit from the Infrastructure Investment and Jobs Act (IIJA), and also from support at the continued to page 14
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