March Construction Starts Grew 7 Percent – Can Your Software Keep Up?
ECL Software’s Fund Control suite can help lenders respond quickly to industry trends
According to data from McGraw Hill Financial, new construction starts in March rose 7 percent or the equivalent of $521.4 billion, accounting for seasonal adjustments. After a slow January and February, this growth has many lenders and builders excited about the future and eagerly seeking new projects. However, it is important to note that this 7 percent figure is an average of multiple different building sectors. Different sectors offer different opportunities, with some displaying phenomenal growth and others holding relatively flat. Here’s a brief overview of the trends in the three main construction sectors.
Nonresidential Building
Nonresidential building was the biggest grower for March, with an overall increase of 24 percent. Within this category, manufacturing plant construction projects led the away with 140 percent growth caused in large part by groundbreaking on new energy-related projects. Office construction also improved, growing 17 percent in March with many opportunities found in big metro areas like New York, Boston, Houston, DC, and San Antonio. Hotel, heathcare, and public building construction also showed strong growth, but store, warehouse, and church construction all fell.
Residential Building
New starts on residential construction projects was relatively flat with 2 percent growth. This sluggish performance is due in large part to a 9 percent decrease in multifamily construction, which had been carrying this sector in recent months. Every region but the West showed some growth in residential housing. New residential construction growth actually dropped 6 percent in the West.
Other Construction
Overall, nonbuilding construction increased 6 percent. However, growth within this category varied widely. Electric utility projects grew 170 percent, bridge construction grew 45 percent, highway construction grew 26 percent, and sewer projects grew 17 percent. However miscellaneous public works, a category including pipelines, mass transit, and site development, dropped 53 percent.
The Right Software Helps You Make the Right Investments
ECL’s Fund Control software suite helps lenders choose projects wisely through its robust forecasting report capabilities. Lenders can run countless “what if” scenarios to determine best and worst case scenarios for individual loans as well as for specific sectors or for the bank’s entire construction portfolio as a whole. These forecasting tools help banks find the right balance of investments for their goals and level of risk tolerance. In addition, ECL’s Fund Control software also offers a complete set of management tools for the administration of loans, including tools for tracking construction progress, disbursing payments, recording borrower pay-downs, and templates for all types of communications.
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