Dodge Construction Network’s 2022 forecast

Dodge Construction Network forecasts 6 percent total growth in highway and bridge construction starts for 2022, with bridges accounting for $1.1 billion in growth. Photo: Joesboy/iStock / Getty Images Plus/Getty Images

Dodge Construction Network offered a forecast of construction markets during its annual Construction Industry Outlook event, highlighting the effects the pandemic had on construction over the last year and a half, where things currently stand and what 2022 and beyond might look like.

Those who presented during the outlook event expect a strong increase in residential construction, a bounce back from 2020 in nonresidential, and plenty of good to come in nonbuilding now that the Infrastructure Investment & Jobs Act (IIJA) is a reality.

Several headwinds are, however, still ahead, including continued supply chain holdups, increasing materials prices and persisting labor shortages. Fortunately, Richard Branch, Dodge’s chief economist, expects construction starts to grow moderately in 2022.

“All of those projects sitting in planning are taking longer to get through,” Branch says. “While construction starts will grow in 2022, that growth is expected to be modest.”

Robust residential construction

Cris deRitis, deputy chief economist at Moody’s Analytics who participated in Dodge’s outlook event, expects demand for residential construction to remain strong over the next five years.

“Builders really can’t build fast enough,” deRitis says “They’ve been hiring as quickly as they can, and still, they would like to hire more. Private residential construction employment is up about 30 percent from where it was prior to the pandemic.”

That employment growth in residential is in contrast to other sectors Dodge measures – all of which saw employment below pre-pandemic levels in the same timeframe.

Branch says significant growth in residential single-handedly makes the construction outlook particularly positive.

“If we were to remove the residential sector, it would look very, very different,” he says.

According to Branch, single-family construction is on track to do more than 1 million units for the first time since 2006, despite the seasonally-adjusted average for the third quarter of 2021 being 10 to 11 percent below 2020 levels.

Additionally, Branch says the multi-family housing market took off in 2021 in an aggressive fashion. He expects that sort of growth to continue.

“In terms of activity, we haven’t seen the level of units that are breaking ground now since the mid-‘80s,” Branch says. “For the year here, 646,000 units of multifamily construction [are] expected to break ground in 2021. That’s the best level for multifamily going all the way back to 1986.”

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