In 2016, the construction industry made its highest contribution to the U.S. economy in seven years.
A recent report from the American Builders and Contractors (ABC) shows that investment in construction is up nationwide. The report showed that in 2016 real residential and nonresidential construction investment (adjusted for inflation) accounted for 6.2 percent of U.S. gross domestic product (GPD), the total value of goods produced and services provided to the country during a year. Construction revenue is a major reason society has seen the industry’s largest contribution to U.S. economy since the end of 2009.
Overall GPD has risen 18.9 percent since the end of the great recession in 2009. This balances out to a compound growth rate of 2.2 percent each year. While showing significant improvement, the real construction component of GDP is still 20 percent below constructions peak GPD in 2006 before the housing bubble collapsed.
The report states, “There are additional benefits from purchases related to, but not directly included in, construction projects, such as equipment for a new factory, furniture for an office or residential property and appliances for commercial and residential units. Further, the workers employed in construction stimulate other parts of the economy as they spend their income.” By conservative estimates these secondary construction costs created an additional 2 to 3 percent to construction’s economic impact.
Overall, many builders, according the report, are finding it difficult to obtain financing – especially in smaller construction companies. They also have few lots at their disposal and are it is becoming harder to find skilled and competent builders. For these reasons, supply for single-family home constructions do not meet the demands of the public.
ABC predicts that 2018 will see an uptick in single-family home construction, a healthier job market and, with normal population growth, the demand for multifamily homes should not decrease. In fact, multifamily home constructions have returned to their normal level.